Financial innovations can have dramatic effects. Explain how and why NOW accounts came about and the impact they have had on financial markets.
> Trudy, who lives in New York, is concerned that her investment portfolio suffers from the “home country bias.” Explain what Trudy is worried about and how might she use mutual funds to address her concern.
> You read a story in the Financial Times reporting that mutual funds that invest primarily in equities are currently holding a high level of cash. Based on this, where do many analysts think stock prices are headed and why?
> Bob is confused about how the pricing of the open-end mutual fund he owns is actually calculated. Bob sees that stock prices have increased, yet the market value of his mutual fund, as determined by the NAV, has declined. Bob thinks that this should not
> If the total market value of an open-end mutual fund is $2,500 and there are 100 shares outstanding at the end of trading on Monday, what would the NAV of the fund be?
> If savings is greater than investment, what is the implication for aggregate demand?
> If the MPC is 0.7 and business investment spending decreases by $10, determine what will happen to total spending according to the spending multiplier.
> In subprime home mortgages the term subprime refers to:
> Explain how an increase in defaults of home mortgages in the United States could affect savers on the other side of the world via CMOs.
> Explain how the economic policies of both the Clinton and George W. Bush Administrations toward home ownership helped to contribute to the financial crisis.
> In a collateralized debt obligation (CDO) such as a collateralized mortgage obligation (CMO), the senior tranche:
> Stan has worked for the same firm for over 30 years and has a defined benefits pension. However, he is worried the pension fund where he works is underfunded. Explain to someone with no training in economics why Stan is worried.
> Explain what a CMO is. How do tranches work?
> What is Fannie Mae? What was it originally established to do?
> A home mortgage where the monthly payment is not enough to pay the monthly principal payment is called
> Explain why adjustable-rate mortgages, while beneficial for some, often turned out to be very harmful to others, especially the teaser-rate variation of the ARM.
> Why might zero-down home mortgages have a higher default rate than traditional home mortgages?
> If a homeowner decides to save money each month to pay property taxes and insurance on their home, this is referred to as:
> Other than getting an adjustable-rate mortgage, what can a home purchaser do to get a mortgage with a lower monthly payment?
> Adjustable-rate mortgages offer lower interest rates than fixed-rate mortgages, yet ARMs are often viewed as “more risky” than fixed-rate mortgages. Why is this the case?
> Which of the following is not a federal government agency designed to assist families getting a home mortgage?
> Home ownership rates in the United States started to increase after World War II. Why did this occur?
> Carolyn has just purchased a homeowners’ insurance policy that will pay for damages to her house that occur only if flooding in her area takes place. What type of insurance did Carolyn purchase?
> Kevin thinks home ownership is part of “the American dream” and has been achieved by most Americans. Why is Kevin incorrect?
> If the MPC is 0.9 and consumption increases by $50 million, determine what will happen to total spending according to the spending multiplier.
> You read that a bank’s net interest income has decreased. Why might this have occurred?
> Why is it that an increase in a bank’s ROE might be a sign that the bank is taking on more risk?
> Explain why an increase in a bank’s ROA may or may not be a reason to purchase the bank’s stock.
> Which of the following is a type of operational risk banks face?
> Explain how the Volcker Rule was designated to limit market risk banks face.
> Explain how a bank that makes only loans in the domestic market can still face exchange rate risk.
> Which of the following is not a source of liquidity for banks?
> The Federal Reserve was established, in part, to be the “lender of last resort” to the banking system. Why can’t we rely on the Federal Reserve to ensure there is enough liquidity in the banking system?
> Credit default swaps often were issued by banks, yet many argue they were actually an insurance product and thus should have been issued only by regulated insurance companies. Explain this argument.
> Bill is confused about why liquidity risk management is such a problem for banks. He says, “It’s simple. If banks are worried about liquidity risk, why don’t they just hold a lot of liquid assets?” How would you answer Bill’s question?
> You hold a portfolio of bonds. You read in the financial press that market interest rates have increased. Holding everything else constant, what has just happened to the duration of your bond portfolio?
> Explain the concept of duration to someone who has no training in economics.
> Judy runs a bank and believes interest rates will increase in the future. Explain what size interest rate gap the bank should have and why.
> Sunita is a loan officer at a bank. She is considering making a loan to a local business, but she is worried about the “conditions” variable of the five Cs of credit risk. What is Sunita worried about?
> Explain why not every asset can be used as collateral on a loan.
> Bob and Karen are both applying for a consumer loan. They both have the same current level of income and the same current level of debt. Why might Karen be more likely to get the loan if Karen is younger?
> Lisa runs a commercial bank and wants to hedge her interest rate risk. Which off balance sheet transaction is Lisa going to engage in on behalf of the bank?
> Many argue that when banks started to issue credit default swaps, they started to become insurance companies. Explain this argument.
> Commercial letters of credit and standby letters of credit tend to be very profitable for banks, yet they seldom require banks to lend money. Explain why.
> Ben, who has health insurance provided through his employer, has an appointment with his physician for an annual exam. Ben pays a $25 co-pay at the doctor’s office. Ben tells Sheila it cost him $25 for the appointment. Sheila responds, “Oh no, Ben, you p
> Debbie has owned her home for several years and has been paying her mortgage on time every month. She is building equity in her home, which can then be used for what type of personal loan?
> Banks offer a wide variety of business loans. Explain why banks try to seek a balance between short-term and long-term loans in their loan portfolio. What are the advantages and disadvantages of offering short-term loans versus long-term loans?
> Explain the trade-offs banks face when they consider holding high-yield securities.
> Demand deposit and NOW accounts are commonly referred to as:
> Not all financial assets are the right vehicle for everyone. Give an example of someone for whom a certificate of deposit would be useful. Also give an example of someone for whom a certificate of deposit would be a bad choice.
> Which is currently the largest liability of banks?
> Banks usually hold a very small percentage of their assets in the form of cash. Recently, however, banks have been holding on to larger amounts of cash. What impact does this have on the other categories of a bank’s balance sheet?
> Hank is confused as to what banks do. He reads that banks “transform assets,” but he has no idea what that means. How would you explain asset transformation to Hank?
> What did Karl Marx consider to be the main economic problem that would ultimately cause the collapse of capitalism?
> Elise is a recent college graduate with student loans on which her parents have cosigned. If Elise is looking to purchase low-cost life insurance to ensure her parents will not have to repay her student loans if she dies unexpectedly, arguably the best l
> Changes to the structure of the Fed during the Great Depression included:
> Explain why familial breast cancer shows a dominant pattern of inheritance in a pedigree even though it is recessive at the cellular level.
> What is a checkpoint?
> What feature(s) of this pedigree indicate(s) recessive inheritance? I-1 1-2 II-8 II-9 Il-11 Il-1 Il-2 II-3 II-4 II-5 II-6 II-7 п-10 III -I III-2 III-3 III-4 II-5 III-6 III-7 III-8 II-9 III-10 III-11 Tay Sachs disease Unaffected heterozygote (carrier)
> What is the main advantage of using YACs, BACs, and PACs?
> What is a contig?
> What causes microsatellites to be polymorphic?
> Why does the probe bind to a specific site on a chromosome?
> What is a genetic map?
> Are hematopoietic stem cells unipotent, multipotent, or pluripotent?
> Explain why stem cells are not depleted during the life of an organism.
> What is the difference between a paralog and an ortholog?
> Is Carbon Copy a transgenic animal?
> In the protocol, why is the nucleus of the oocyte removed?
> Why is a β-lactoglobulin promoter used?
> What is the difference between a gene knockout and a gene knockin?
> What is the purpose of using CNBr in this experiment?
> What is the purpose of using a secondary antibody?
> How is the sgRNA different from certain components of the bacterial defense system described in Chapter 17?
> Describe three possible uses of site-directed mutagenesis.
> What needs to happen so the reporter molecule can emit fluorescence that is not quenched?
> After four cycles of PCR, which type of PCR product predominates? Explain why.
> What is horizontal gene transfer?
> What is an advantage of making a cDNA library rather than a genomic library?
> Explain the meaning of the name reverse transcriptase.
> Explain the role of the gene that is the selectable marker gene in this experiment.
> Prior to the action of DNA ligase, how many hydrogen bonds are holding these two DNA fragments together?
> What is the purpose of the rat liver extract in this procedure?
> In people, what is a common cause of thymine dimer formation and in what cell type(s) would it be most likely to occur?
> Does 5-bromouracil cause a transition or a transversion?
> Explain how tandem mass spectroscopy is used to determine the sequence of a peptide. Once a peptide sequence is known, how is this information used to determine the sequence of the entire protein?
> Can two-dimensional gel electrophoresis be used as a purification technique? Explain.
> In the procedure called RNA sequencing (RNA-Seq), what type of molecule is actually sequenced?
> Refer to question 3 in More Genetic TIPS before answering this question. Based on the multiple-sequence alignment in Figure 24.10, what is/are the most probable time(s) that mutations occurred in the human globin gene family to produce the following amin
> Take a look at the multiple-sequence alignment in Figure 24.10 of the globin polypeptides, focusing on amino acids 101 to 148. A. Which of these amino acids are likely to be most important for globin structure and function? Explain why. B. Which are li
> What is the function of reverse transcriptase?
> The goal of many computer programs is to identify sequence elements within a long segment of DNA. What is a sequence element? Give two examples. How is the specific sequence of a sequence element determined? In other words, is it determined by the comput
> To identify the following types of genetic occurrences, would a computer program use sequence recognition, pattern recognition, or both? A. Whether a segment of Drosophila DNA contains a P element (which is a specific type of transposable element) B. W
> In this chapter, we considered a computer program that translates a DNA sequence into a polypeptide sequence. Instead of running this program, a researcher could simply look the codons up in a genetic code table and determine the sequence by hand. What a
> With regard to DNA microarrays, answer the following questions: A. What is attached to the slide? Be specific about the number of spots, the lengths of DNA fragments, and the origin of the DNA fragments. B. What is hybridized to the microarray? C. How
> Explain how DNA microarrays are used in molecular profiling of cancerous tumors.
> The codon change (Gly-12 to Val-12) in human rasH that converts it to oncogenic rasH has been associated with many types of cancers. For this reason, researchers would like to develop drugs to inhibit oncogenic rasH. Based on your understanding of the Ra
> Discuss ways to distinguish whether a particular form of cancer involves an inherited predisposition or is due strictly to (postzygotic) somatic mutations. In your answer, consider that only one mutation may be inherited, but the cancer might develop onl
> An experimental assay for the blood-clotting protein called factor IX is available. A blood sample was obtained from each individual in the following pedigree. The amount of factor IX protein, shown within each symbol on the pedigree, is expressed as a p
> Chapter 21 describes a method known as Western blotting that can be used to detect a polypeptide that is translated from a particular mRNA. In this method, a particular polypeptide or protein is detected by an antibody that specifically recognizes a segm
> A particular disease is found in a group of South American Indians. During the 1920s, many of these people migrated to Central America. In the Central American group, the disease is never found. Discuss whether or not you think the disease has a genetic
