n discussing the 2007-2009 financial crisis, Federal Reserve Vice Chair Stanley
ID: 1104718 • Letter: N
Question
n discussing the 2007-2009 financial crisis, Federal Reserve Vice Chair Stanley Fischer observed that "The fact that losses in what was a relatively small part of the mortgage market quickly spread through the rest of the financial system ilustrates how the complex interconnections among banks and nonbanks can amplity shocks in significant and unanticipated ways Source Stanley Fischer, The importance of the Nonbank Financial Sector," remarks at a conference on "Debt and Financial Stablity- Regulatory Chalenges sponsored by the Bundesbank and the German Ministry of Finance, March 27, 2015 All of the following are considered "nonbanks," except 0 A, credit unions OB, investment banks O C. mutual funds OD, hedge funds Which of the following is an example of the interconnections among banks and nonbanks he was referring to? O A. Faling prices of mortgage-backed securities and other housingrelated assets led to losses at banks and other intermediares O B. Banks would purchase short term commercial paper tom non-ban O C. Customers could transfer money through ACH from banks to nonbarks MC seat D. Banks made money on mortgage-backed securities they purchased as a steep ck to seect your ane O Type here to searchExplanation / Answer
Answer 1: Option A.
Credit Unions are not considered to be non banks. Investment banks, hedge funds and mutual funds are non bank institutions.
Answer 2: Option B
Banks would purchase short term commercial papers fron non banks.
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