35. "Too-big-to-fail"A) is a good policy because it ensures that large banks will not go out of business.B) helps reduce moral hazard in banking.C) is a consequence of safety net policies that encourage larger banks to take on more risk.D) has been an issue in the U.S. banking system since the National Bank Act of 1863.36. The reduction in the number of U.S. banks that has occurred since the mid 1990's has been due primarily toA) bank failures from increased competition.B) voluntary bank mergers to take advantage of cost efficiencies.C) the closing of banks by federal regulators.D) elimination of state banks since all banks must now be nationally chartered.37. Capital requirements for banksA) are specified by the Glass-Steagall act of 1933B) increase moral hazard in banking.C) encourage banks to limit their holding of risky assets by putting some of the banks' own money at risk.D) specify the type of collateral (capital) that can be accepted to back up a bank loan.38. Disclosure requirementsA) provide savers with information about what a bank is doing with their money.B) mean that borrowers must tell a bank everything about their credit history before getting a loan.C) refer to government regulators periodically examining bank records and practices.D) are the process by which the FDIC keeps a failing bank from closing.39. An inverted yield curveA) is not possible. Longer maturity interest rates are always higher than shorter maturity interest rates.B) is the typical shape of the yield curve.C) signals that savers think that future interest rates may fall, possibly due to recession.D) cannot be explained by the expectations hypothesis.40. Today's interest rate for a Aaa rated corporate bond is 4.35%, while a Baa rated bond of the same maturity paysa rate of 5.03%. The difference in these two ratesA) means that a two year bond must pay a rate of 4.69%B) occurs because the Aaa is less risky.C) illustrates a normal structure. On a day that the Baa pays a lower rate it is an inverted structure.D) means that the risk premium for the Baa bond is 0.68%

Banking refers to the business activity of accepting and safeguarding money owned by individuals and…

35. "Too-big-to-fail" A) is a good policy because it ensures that large banks will not go out of business. B) helps reduce moral hazard in banking. C) is a consequence of safety net policies that encourage larger banks to take on more risk. D) has been an issue in the U.S. banking system since the National Bank Act of 1863.

35. "Too-big-to-fail" A) is a good policy because it ensures that large banks will not go out of business. B) helps reduce moral hazard in banking. C) is a consequence of safety net policies that encourage larger banks to take on more risk. D) has been an issue in the U.S. banking system since the National Bank Act of 1863.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please no written by hand Use the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions. Bank’s Balance Sheet Assets Liabilities and Owners' Equity Reserves $150 Deposits $1,200 Loans $600 Debt $200 Securities $750 Capital (owners' equity) $100 Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and ? the ? account. This would also bring the leverage ratio from its initial value ? of to a new value of ? . Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply. The total value of liabilities The riskiness of each asset The size of the monetary base
4. Working through an open-market operation Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. Assets (Billions of Dollars) Total reserves 5 Checkable deposits 25 20 50 Loans Securities Total O What is the required reserve ratio? 40% 25% Liabilities and Net Worth 5% 10% Total 50 50
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The balance sheet of Nationa Bank is shown below (assume a legal reserve ratio of 10%): Assets Liabilities & Net Worth Reserves 90,000 Checkable Deposits 500,000 Cash 20,000 Stock Shares 270,000 Loans 125,000 Securities 235,000 Property 300,000 1. Based on the balance sheet above, how much money can the bank create? 2. If the bank creates the full amount possible, how much money can the banking system create as a result? 3. If the Federal Reserve raises the reserve ratio to 20%, how much will the bank and banking system be able to create based on the new reserve ratio?
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© Macmillan Learning What is the bank's net worth? Assume that the T-chart shows the financial position of a small local bank. Assets Loans: $27.00 Bonds: $13.00 Reserves: $43.00 Liabilities Deposits: $30.00