1. The foreign city with the most U.S banks is: A. London B. Frakfurt C. Beijing

Question

1. The foreign city with the most U.S banks is:

A. London B. Frakfurt C. Beijing D. Tokyo

2. Traditional morgages require _______ while many suprime mortgages were offered with ____

A. a substatial down payment; "zero down." B. high interest rate; low interest rate C. no down payment; "zero down" D. low interest rate; substaintial down payment

3. Finance companies are not as heavily regulated as commercial banks, which enables them to make subprime loans. reasons for this light regulation include which of the following:

A. The adverse selection problem is not as bad in the subprime lending industry

B. Finance company are better than banks at solving asymmetric information problems

C. Finance companies do not accept deposits

D. all of the answers are correct

4. The _______ Act restricts banks from holding more than ___ percent of all commercial bank deposits

A. Glass-Steagall; 10 B. McFadden; 5 C. Riegle-Neal; 10 D. Gramm-Leach-Bliley; 5

5. Banks mitigate moral hazrd by

A. requiring borrowers to have collateral B. screening potential borrowers C. charging high interest rate D. requiring borrowers to open a checking account

6. The rating agencies argue that their opinions are

A. priced fairly in the market B. protected by the First amendment C. divided into accurate risk categories, e.g., triple A D. designed to be used only by sophisticated investors

Explanation / Answer

1. B

2. B

3.D

4.C

5.A

6.A

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