Deck 14: The 200709 Financial Crisis and Other Financial Crises

Question 1

One of the most significant causes of one housing price bubble was ____________.

A)people irrationally thinking houses were more valuable than they were.
B)it was about time-there is always a real estate price bubble from time to time.
C)easy money policies of central banks in the U.S.and Europe.
D)careless home buyers overpaying for houses.
E)shortage of houses relative to demand.

Answer 1

C

Question 2

A repo transaction is _____________________.Choose the one answer that is wrong.

A)repurchase transaction.
B)collateralized deposit.
C)an insured deposit-like claim arising out of securitization.
D)a loan that is secured by a security.

Answer 2

an insured deposit-like claim arising out of securitization.

Question 3

Perhaps the two most ubiquitous features in financial crisis in different countries are ________________ and ________________.

Answer 3

High leverage in banking and an asset price bubble in some sector of the economy.

Question 4

The external factors and market incentives that contributed to the 2007-09 crisis were:

Question 5

The OTD model refers to:

A)Overall Trade Development
B)Originate to Distribute
C)Office of Thrift Development
D)Offshore Treasury Deposits

Question 6

ABCP refers to:

A)American Banking Company Paper
B)African Banks Corporate Portfolio
C)Asset Backed Commercial Paper
D)Actuarially Bullish Commercial Paper

Question 7

The 2007-09 financial crisis was due to ________________________________.

A)Bad luck
B)Violence in the Middle East
C)Bank depositors withdrawing their deposits due to panic
E)Heightened insolvency concerns about financial institions

Question 8

What was the connection between mortgage securitization and the 2007-09 financial crisis?

Question 9

The financial crisis of 2007-09 cost the U.S.an estimated:

A)$6 to $14 trillion
B)$500 billion
C)€ 800 billion Euros
D)$200 trillion

Question 10

The real effects of the financial crisis were __________, __________, __________, and __________.

Question 11

"Success-driven skill inferences" means that ___________________________.

A)Success improves our ability to infer skills.
B)We tend to form elevated assessments of the abilities of bankers to manage risks after a prolonged period of low defaults and high profitability in banking.
C)Our inferences of the skills of bankers tend to be driven more by success than failure.
D)Our success in driving inferences means we are skilled.

Question 12

One of the causal factors in generating the 2007-09 financial crisis was that the pre-lending screening incentives weakened one to _______________________.

A)the OTD model of securitization.
B)poor bank regulation.
C)greedy bankers.
D)careless mortgage brokers.
E)ignorant borrowers.

Question 13

While government intervention in financial crises sometimes helps to stave off a collapse of the system, the danger in such interventions is _________________:

A)People outside banking become envious of the special treatment given to banks.
B)Moral hazard.
C)Greedy bankers get to keep their profits.
D)People raise uncomfortable questions about what caused the crisis.