Finance Chapter 5 Problems

The perfect financial storm that developed in 2008

Info icon This preview shows pages 16–17. Sign up to view the full content.

63. The “perfect financial storm” that developed in 2008, which put the U.S. economy was on the verge of collapse was characterized by all of the following EXCEPT: a. The housing price “bubble” burst in 2006 and began a sharp decline. b. Stock market prices peaked in 2007 and began a sharp decline. c. Many of the mortgage-related debt securities originated and sold to others, or held, by banks became difficult to value during the perfect financial storm and quickly became known as “troubled” or “tonic” assets. d. Individuals and businesses were defaulting on loans and home mortgages in increasing numbers due to the weakening economy and falling home prices. e. All of the above were factors Answer: e p 101-102 64. During the 2007 - 2009 financial crisis, many major financial institutions and business corporations were on the verge of collapse or failure; however, some of the very largest corporations and financial institutions were deemed as being ________ because their failure would cause cascading negative repercussions throughout the U.S. and many foreign economies. 65. During the 2007 - 2009 financial crisis, some of the very largest financial institutions were deemed as being “too big to fail ” because their failure would cause cascading negative repercussions throughout the U .S. and many foreign economies. As a result, the Federal Reserve 66. During the 2007 - 2009 financial crisis, ___________ and __________, who were major participants in the secondary mortgage markets, were on the verge of financial insolvency and possible collapse in mid-2008.
Image of page 16

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Survey of Finance 16A Practice Problems key Chapter 5 page 17 67. In fall 2008, the U.S. Congress and President George W. Bush responded to the financial crisis with the passage of the _____________ in early October of that year. a. Economic Stimulus Act b. Economic Recovery Act c. Economic Stabilization Act d. Economic Booster Act e. none of the above Answer: c p 102 68. A primary focus of the Economic Stabilization Act of 2008, which became known as the ___________________________, was to allow the U.S. Treasury purchase up to $700 billion of troubled or toxic assets held by financial institutions. 69. In an effort to stimulate economic activity, Congress and the president passed the $787 billion _________________________________ in February, 2009 with the funds to be used to provide tax relief, appropriations, and direct spending. 70. As the decade of the 2000s came to a close, the unemployment rate remained at the 10 percent level and continued at high level resulting in the Fed engaging in .
Image of page 17
This is the end of the preview. Sign up to access the rest of the document.
  • Fall '09
  • Guyton
  • Finance, Monetary Policy, Federal Reserve System, 16A Practice Problems, Finance 16A Practice, Problems Key Chapter

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern