QUESTION 50In the Movie House of Cards, which of the following contributed to the recessin of 2006-2008:1. Banks lending to unqualified borrowersII. Borrowers borrowing more than they could payII. Rating Agencies not correctly rating debt securitiesV. Lack of Government oversight, regulationV. Wall Street spreading risk to unsuspecting clientsO A.IOnlyO B. I & IIO C.I,I & IVO D.I, II, III & IVClick Save and Submit to save and submit. Click Save All Answers to save all answers.

Recession of 2006-2008 one of main event in financial sector which have more impact on whole…

In the Movie House of Cards, which of the following contributed to th I. Banks lending to unqualified borrowers II. Borrowers borrowing more than they could pay II. Rating Agencies not correctly rating debt securities IV. Lack of Government oversight, regulation V. Wall Street spreading risk to unsuspecting clients O A.I Only O B. 1 & II C. II,II & IV O D. I, II, III & IV

In the Movie House of Cards, which of the following contributed to th I. Banks lending to unqualified borrowers II. Borrowers borrowing more than they could pay II. Rating Agencies not correctly rating debt securities IV. Lack of Government oversight, regulation V. Wall Street spreading risk to unsuspecting clients O A.I Only O B. 1 & II C. II,II & IV O D. I, II, III & IV

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The "mark to market" rule (a) Created an unrealistic picture of the financial health of some banks. (b) Required banks to recognize in their balance sheet decrease in value of assets as their price declined in the market, instead of waiting until the asset was sold. (c) Caused the net worth of some banks to decline significantly and making it impossible for the banks to make loans. (d) All the above. (e) Only (b) and (c) are true.
Which of the following should a bank do if they wish to engage in both security rating and investment banking? Group of answer choices a. Restrict prepublication of analyst reports to research personnel only b. Base compensation for analysts on positive ratings of securities c. Place analysts in the supervisory organization under sales personnel d. All of the above
While individual consumers have a credit score, large, publicly-held corporations are not typically rated for default risk True False
What is shadow banking and how does it differ from traditional retail banking? What kind of threat does shadow banking pose to the financial system? Discuss the role of shadow banking in the financial crisis of 2007-2008.
Which of the following statements is NOT true? A. Debt contracts tend to impose more restrictions on the actions of the borrower than the lender B. Larger corporations have easier access to the securities market C. The financial sector is one of the least regulated industries in the US economy D. Collateral is used to secure debt contracts
The agency problem in the mortgagė markets was due to the business model. O 1) "pass-through" O 2) business-as-usual 3) securitization O 4) originate-to-own O5) None of the answers are correct
In the run-up to the 2007 – 2009 financial crises, all of these key trends undermined the health of the mortgage (and other) securitization markets except: Group of answer choices D. Banks failing to distribute securitized risk A. Risk-based pricing C. Subprime credit wrapped into complex and overvalued securities B. Subprime loans
What is a financial market? What is the role of a financial market? 3-2 What would happen to the standard of living in the United States if people lost faith in our financial markets? Why? 3-3 How does a cost-efficient capital market help to reduce the prices of goods and services? 3-4 The SEC attempts to protect investors who are purchasing newly issued securities by requiring issuers to provide relevant financial information to prospective investors. The SEC does not provide an opinion about the real value of the securities. Hence, an unwise investor might pay too much for some stocks and consequently lose heavily. Do you think the SEC should, as a part of every new stock or bond offering, render an opinion to investors on the proper value of the securities being offered? Explain.
4.Below are various states of financial distress: a. b. What is the order of increasing gravity that analysts typically consider when assessing credit risk and bankruptcy risk according to a continuum of financial distress? c. d. Problem 3 1. defaulting on a principal payment on debt 2. restructuring debt 3. liquidating a firm 4. filing for bankruptcy 5. failing to make a required interest payment on time 5, 1, 2, 3, 4 5, 2, 1, 4, 3 1, 5, 2, 4, 3 1,5, 2, 3, 4 I

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