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Unformatted text preview: RHW15 4 5 7 14 15 16 19 20 22 23 Question4 - Single Correct 1.0 Point When the Treasury Department recapitalized some banks, they were A engaged in a bailout. B operating as a lender of last resort. C decreasing the money supply. D all of the above. DEFINITION OF BAILOUT – HELPING INSOLVENT (BANKRUPT) FIRM WHOSE LIABILITIES EXCEED ITS ASSETS. BOUGHT STOCK IN BANKS PROVIDING THEM WITH CAPITAL AND THE GOVERNMENT WITH PARTIAL OWNERSHIP Question5 - True/False Question 1.0 Point Only a leveraged investor can end up with negative equity when a stock market bubble bursts. True False IF YOU BUY ASSET FOR $100 WITH (NO LEVERAGE) THE MOST YOU CAN LOSE IS $100 I.E. HAVE 0 EQUITY OR OWNERSHIP IF YOU BUY IT WITH $50 OF YOUR OWN CAPITAL AND BORROW $50 (I.E. USE LEVERAGE OR BORROWED FUNDS) THEN IF IT FALLS TO 0, YOUR NET WORTH OR EQUITY IS -50 SINCE YOU OWE $50 Question7 - Single Correct 1.0 Point An investor borrows 20% of the funds to buy a stock at a price of $100. If the price falls to 50, his or her An investor borrows 20% of the funds to buy a stock at a price of $100....
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This note was uploaded on 02/05/2012 for the course 331 464 taught by Professor Hsu during the Spring '09 term at Rutgers.
- Spring '09