THE BIG SHORT THIS IS A TRUE STORY CHRISTIAN BALE NTEVE CARELL MYAN GOSLING PITT The Big Short Coordinating Comprehension Questions 1. What happened in the 1970s that would lead to the 2008 financial cri- sis? Market 2. Why did Mark Baum criticize big banks? ral Debt 3. What did Micheal Burry discover? 4. What does it mean to "short"? 5. What was the primary problem with mortgage bonds?
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- Explain how a company can fail when the safeguards that should be in place fail.Jlalt waiINIII5 auLiiUTLics eguiaLC 5latC paiin5 VVILIIU UL I DI C I15ui alILt. FDIC regulates and insure state banks that are not Fed members. The following are regulations put in place in US to reduce Risk in banking operations, EXCEPT: Restrictions on Bank Consolidation Regulation of Capital Requirements O Chartering and periodic Bank Examinations Disclosure RequirementsWhich of these statements are true? The discount rate is normally equal to the federal funds rate. The federal funds ratre is normall higher than the discount rate. The Federal Funds rate is the rate that banks are charged when they borrow from the Fed. O The discount rate is normally higher than the federal funds rate.
- Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.Classic BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 1,000 Deposits 3,000Securities 2,000 Equity 7,000Loans & Advances 1,000Property, Plant and Equipment 6,000 .10,000 10,000 Prudent BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 600 Deposits 2,500Securities 1,500 Equity 4,400Loans & Advances 800Property, Plant and Equipment 4,000 .6,900 6,900Assume a required reserve ratio of 10%.(a) What is the amount of excess reserves in this commercial banking system? (b)What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded? (c) Determine the stock of broad money supply assuming the non-bank public holds…Explain and illustratethe deposit creationprocess throughT-accountsSupose the Bak o Englandwshes torestan ifatio, o ceses BnkRote. Which of thefolowing entswil n be patof the monetay polcy tansmision poces? The increased Bark Rate willincese the vaue of sering, The increased Bank Ratewillea to increases in othe nominalinterst ates ) Theincreased Bark Rate wil reuce the incomes people expect to have in futue.
- During The 2007-2008 financial crisis, Sould government purchase the devalued paper, so that financial institution can clean up their balance sheet and prevent a collapse of the financial system?List and describe thefactors that affectthe money marketand the equilibriuminterest rateSuppose a researcher discovers that a measure of thetotal amount of debt in the U.S. economy over thepast 20 years was a better predictor of inflation andthe business cycle than M1 or M2. Does this discoverymean that we should define money as equal to the totalamount of debt in the economy?
- If you are a banker and expect interest rates to rise inthe future, would you prefer to make short-term loansor long-term loans?Nobel Prize winner Franco Modigliani found that themost important transmission mechanisms of monetarypolicy involve consumer expenditure. Describe how atleast two of these mechanisms workSuppose that after a few mergers and acquisitions, onlyone bank holds 70% of all deposits in the United States.Would you say that this bank would be considered toobig to fail? What does this tell you about the ongoingprocess of financial consolidation and the governmentsafety net?