International Economics and Finance

Money Banking and Monetary Policy

Statistical Analysis for Economics and Finance

31.  In the financial markets, it is said that the price of liquidity is never in excess of the price of what? ANS “…the price of liquidity is never in excess of the price of illquididity…” Illiquidity is going in debt, having a negative net worth, becoming insolvent 32. The fragmented American financial markets derive from what? Gram bleach liley act of 199 which reappealed Glass Steagle OR because of the intro to online trading which caused people to look for other places to get info. (see citigroup reading). The more complex the markets become such as through online trading and such the more fragmented they become. The term refers to how financial markets are structured.   Typically, a market can be either 'concentrated', where most, if not all, trading in a set of securities is conducted in one or two trading centers, or 'fragmented' where investors send orders to numerous trading venues that all compete with each other for order flow.   A trading venue can be a physical place like the floor of the New York Stock Exchange or a virtual meeting place like Nasdaq’s electronic market for trading stocks.   a fragmented market provides the benefits of more competition for order flow and greater incentives to introduce innovative new ways to trade securities.   These benefits, however, might be offset by potentially greater search costs to find sufficient liquidity, reduced transparency in security prices, and greater uncertainty of order execution. 33. The US abandoned the gold standard because of what? Possible ans 1: dollar was no longer worth 1/35 th of an ounce of gold. Possible ans 2: caused deflation: decrease in the price of general goods and services. -Convertability/ liquidity issues Possible ans 3: To raise the money supply the US would be required to increase their gold reserves and thus getting rid of the gold standard allowed the Fed to more easily raise/control the money supply. 34. The five sectors of the financial markets are what? (look at page 45 in notes) 1.Money market 2.debt market (bond market) 3. equity market ( stock market:primary and secondary) 4. Derivatives Market 5. Private equities market 35. President Jackson veto message of the second bank invoked what reason? Jackson's message labeled the Bank elitist and anti-republican. It also argued extensively that the Bank was unconstitutional and that it was neither "necessary" nor "proper" for the federal government to authorize and permit the existence of an institution so big and so powerful that only directly benefited a privileged few. 36. The second bank was located where? ANS found on wikipedia: 420 Chestnut Street Philadelphia, Pennsylvania 37.  FleetBoston’s response to the Amex Blue card was what? ANS: Fusion Card With Visa smart card technology 38.  Hedge’s boss at fleet bank was who? Chad Gifford - Case PG 8… If it depends on time periods the earlier CEO was Terrence Murray then Charles Gifford later. 39. The McKinsey view of Citi group structure was what? McKinsey analysts agreed. In a recent McKinsey Quarterly article they stated that, “ As banks explore future strategies, they must look beyond today’s market conditions. When the current credit crunch eases, offering credit at below-market rates will not be enough.”20 Success in [high margin investment banking], takes top-tier skills. For M&As and IPOs— both life-changing events for corporations—skills and experience are vital; discounts on other products are pretty well irrelevant. When credit becomes more available, it is sheer expertise that will determine which firms will win the lucrative fees at the sophisticated end of investment banking. Credit will be a tool to sweeten the deal... While universal and investment banks are currently gaining market share...and are leveraging their existing client relationships to win investment-banking business, they have made their biggest gains in debt products, in which they now account for more than half of new issues. This is hardly surprising in that the underwriting of debt products requires skills that are closely related to credit. McKinsey analysts also stated that their market research indicated that large corporations don’t want a one-stop shop for banking. “They will still pick best of breed... More serious, banks that bundle credit with investment-banking services will end up with the riskiest borrowers, since corporations that can’t borrow easily are the most likely to welcome this strategy.” In the end, they argue: “providing customers with credit at unattractive rates can’t be sustained, even if it confers a foothold in investment banking [today].” 40. Weill’s  successor at Citi group was who? Charles Prince 1. A financial firm liabilities are what? Deposits/Notes 2.  A _____ is when a financial firm sells a security with a promise to buy it back later. Repo 3. Which of the following is not a way financial firms borrow?

ECO | 3220 | Money Banking and Monetary Policy | study guides | 31.  In the financial markets 

Introduction to Econometrics, 3e (Stock) Chapter 11 Regression with a Binary Dependent Variable 11.1 Multiple Choice 1) The binary dependent variable model is an example of a A) regression model, which has as a regressor, among others, a binary variable. B) model that cannot be estimated by OLS. C) limited dependent variable model. D) model where the left

ECO | 4000 | Statistical Analysis for Economics and Finance | question bank | Introduction to Econometrics  

3) Purchasing power parity (PPP), postulates that the exchange rate between two countries equals the ratio of the respective price indexes or ExchRate = (where ExchRate is the foreign exchange rate between the two countries, and P represents the price index, with f indicating the foreign country). The long - run version of PPP implies that that the exchang

ECO | 4000 | Statistical Analysis for Economics and Finance | question bank | 3) Purchasing power parity (PP

2.2 Essays and Longer Questions 1) Think of the situation of rolling two dice and let M denote the sum of the number of dots on the two dice. (So M is a number between 1 and 12.) (a) In a table, list all of the possible outcomes for the random variable M together with its probability distribution and cumulative probability distribution. Sketch both distributions

ECO | 4000 | Statistical Analysis for Economics and Finance | question bank | 2.2 Essays and Longer Question

-Over 2007–2009, the subprime mortgage crisis evolved into a broad financial and economic crisis in the United States. The stock market fell drastically, some of the country’s most prestigious financial institutions failed or came close to failing, lending was disrupted throughout the economy, and the unemployment rate rose to 10 percent. P586 23. to prevent a financial crisis in 2008, the fed under _ Ben Bernanke___ pursued a series of unorthodox policies, for example it did what? Term Auction Facility and the Primary Dealer Credit Facility, Money Market Investor Funding Facility, began purchasing prime mortgage- backed securities issued by Fannie Mae and Freddie Mac. P571 Unorthodox Policies: 1) FED’s loan to JP Morgan to save Bear Sterns. 2) Establishing Primary Dealers Credit facility 3) Refusing to help Lehman Brothers 4) Providing $85 billion to AIG. 24. The interest rate international banks borrow and lend is the what? - LIBOR or Interbank offered rate -Federal fund rate, Interbank rate or overnight rate. (By NF) 25. in 2007, banks refused to request a loan from the fed because they were worried about what? The Fed played the role as lender of last resort and encourage banks to request discount loans if they needed cash.  Many banks refuse because they fear the discount loans would signal their weakness. ( the Northern Rock episode showed that requesting help from central bank could backfire)… p564 potential damage to their reputation. 26. after the sale of bear stearns to jp morgan the fed established what for investment banks? After the sale of Bear Stearns to JPM, Fed established Primary Dealer Credit Facility to make loans to investment banks. (lesson 25) 27. the key difference between financial crisis in emerging markets and those in industrialized countries is what? Emerging-economy crises have much in common with U.S. crises, including bank failures and asset-price declines. However, they also have another key element: capital   flight, a sudden decrease in net capital inflows (NCI) that occurs when foreign savers lose confidence in an economy . Capital flight creates additional channels in the vicious circle of a financial crisis. (580) -When emerging economies experience crises, governments and central banks often don’t have the resources to respond. In particular, they lack foreign currency needed to pay debts set in dollars. 28.   The main cause of the Argentine financial crisis is what? - The main cause of the Argentinean Financial Crisis has been the large government budget deficit . (Book Page 581 by NF) -An overvalued fixed exchange rate (locked at one peso per dollar since 1991) and an excessive amount of foreign debt were the two proximate causes of the Argentine crisis.

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