If a homeowner decides to save money each month to pay property taxes and insurance on their home, this is referred to as:
> Explain how savings banks and Savings & Loans were similar but also very different.
> Initially, thrifts were depository institutions that often were considered “special.” Why were they viewed this way?
> Explain the controversies that exist over the Bureau of Consumer Financial Protection. How can some critics claim it has too much power, whereas other claim it has no meaningful use at all?
> The Community Reinvestment Act was created in response to the issue of redlining. What is/was redlining and how did the act attempt to address it?
> In a “pay off and liquidate” approach, what is being liquidated?
> Explain how regulators use the CAMEL rating in the regulation process.
> Robert is confused about why regulators created the too big to fail policies. What would you tell Robert?
> The Basel Accords attempted to address which of the following issues?
> Explain how depository institutions successfully “got around” Regulation Q without actually breaking the law.
> Why is it that bank executives today may not want their banks to hold sufficient levels of bank capital, even if doing so would make their banks more stable?
> What does it mean that the Federal Reserve is the “fiscal agent” of the US government?
> What did the Riegle-Neil Act of 1994 allow US banks to do?
> Ted argues that we should return to the “old days” when banks were forbidden from branching across state lines. Ted believes this will make banks safer because they will concentrate on one, narrowly defined market. Evaluate Ted’s argument.
> The Glass-Steagall Act of 1933 separated commercial banks, investment banks, and insurance companies. Explain how the act was slowly chipped away at before it was finally phased out in 1999.
> If the economy is currently “overheating,” this means:
> Johnny believes input markets, such as financial markets, are inefficient. Use the aggregate supply and aggregate demand to explain why this leads Johnny to argue that government policy is needed to end economic slowdowns.
> Bobby believes input markets, such as financial markets, are efficient. Use aggregate supply and aggregate demand to explain why this leads Bobby to believe economic slowdowns will “end themselves.”
> If the cost of doing business for producers increases, which of the following occurs?
> Why is the long-run aggregate supply curve vertical? Why might the long-run aggregate supply curve move?
> Explain the difference between movement along the short-run aggregate supply curve and shifts of the short-run aggregate supply curve.
> Deep economic contractions, such as the Great Depression of the 1930s, are depicted in the Keynesian framework as which part of the aggregate supply curve?
> Which of the following has resulted in questions being raised about the future of the Social Security public pension system?
> Why was an upward-sloping part of the aggregate supply curve added to Keynes’s original aggregate supply curve?
> Explain to someone with no training in economics why the aggregate supply curve might be vertical at the full employment level of output.
> Which of the following are characteristics that make hedge funds different from open-ended mutual funds?
> Explain how close-ended mutual funds are, at the same time, in some ways very similar to but in other ways very different from open-ended mutual funds.
> Explain why ETFs seldom trade at a premium or discount relative to their NAV.
> Doug sees that his mutual fund is charging him with a 12b-1 fee. He has no idea what this is. Which of the following would correctly summarize for Doug what he is being charged?
> Adrienne is a registered financial advisor. What role do mutual funds and mutual funds play in Adrienne’s career?
> Jason is thinking about purchasing some mutual fund shares, but he is confused by the terminology. How would you explain to Jason the difference between a mutual fund with loads and a no-load mutual fund?
> Grace is disappointed with the relatively low rate of return she is earning on her government bond mutual fund. She sees another bond fund that invests in corporate securities offered by firms that are in financial distress and/or do not have much experi
> Bob lives in Texas, is 64 years old, and is close to retirement. What type of mutual funds might be best for Bob? Why?
> Charlotte is fully vested in her defined contribution pension plan where she works. What will happen if Charlotte decides to quit her job and go work for a different employer?
> 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?
> 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.
> Financial innovations can have dramatic effects. Explain how and why NOW accounts came about and the impact they have had on financial markets.
> 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?
