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(25) A possible sequence for the three stages of a financial crisis might be lea

ID: 1128620 • Letter: #

Question

(25) A possible sequence for the three stages of a financial crisis might be leads to leads to -' A) asset price declines; banking crises; unanticipated decline in price level B) unanticipated decline in price level: banking crises: increase in interest rates C) banking crises; increase in interest rates; unanticipated decline in price D) banking crises; increase in uncertainty, increase in interest rates (26) Agency problems in the subprime mortgage market included all of the following EXCEPT A) homeowners could refinance their houses with larger loans when their homes appreciated in value. B) mortgage originators had little incentives to make sure that the mortgagee is a good credit risk. C) underwriters of mortgage-backed securities had weak incentives to make sure that the holders of the securities would be paid back. D) the evaluators of securities, the credit rating agencies, were subjectto conflicts of interest. (27) Dodd-Frank addressed many of the issues that led to the financial crisis. Which of the following was NOT addressed by Dodd-Frank regulations? A) stricter consumer protection laws B) privately owned, government-sponsored enterprises (GSEs) such as Fannie mae and Freddie Mac C) resolution authority over the large financial institutions D) higher requirements on firms dealing in derivatives

Explanation / Answer

25) A possible sequence for the three stages of a financial crisis might be ___________ leads to _____________ leads to____________

A) asset price declines ; banking crisis ; unanticipated decline in the price level

26) Agency problems in the subprime mortgage market included all of the following EXCEPT

A)homeowners could refinance their houses with larger loans when their homes appreciated in value.

27) Dodd-Frank addressed many of the issues that led to the financial crisis. Which of the following was NOT addressed by Dodd-Frank regulations?

B) privately owned, government sponsored enterprises (GSEs) such as Fannie mae and Freddie Mac.