True or false. 1. If your bank in Los angeles is owned by the Argentines, your d

Question

True or false.

1. If your bank in Los angeles is owned by the Argentines, your deposits are less safe than if it were owned by Americans.

2. Collateralized debt obligations(CDO) on average have less risk than certificate of deposits.

3. The more collateral there is backing a loan, the less the lender has to worry about adverse selection.

4. The spread between long term short-term bond yeilds widens during times of economic uncertainty.

5. Banks are more important to businesses in germany than they are in the U.S.
6.The fisher equation says that inflation increases the real rate of interest.
7.The biggest source of funds for U.S. businesses in the stock market.
8.The federal reserve just announced that it would start raising the federal funds rate in the future.
9. The current financial crisis started out with prime loan problems.
10. Lately, bond yields and mortgage rates have been going up precipitously.

Explanation / Answer

1. false 2. false. certificate of deposits always have the least risk. 3. true. if the borrower turns out to be a bad credit risk, and goes broke, the lender loses less because the collateral can be sold to make up any losses on the loan. thus adverse section is not as severe a problem. 4. true. 5. false. its the other way. 6. true 7. fasle. no its not! 8. true 9. false. it started with sub-prime loan problems... 10. true please dont forget to rate my answer :)

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