fina 3313 chapter2
From Professor Charles' youtube talk in the e-text. Suppose you have two labor markets with different sets of employers and with different average prejudice against Blacks levels. Therefore, discrimination against Blacks will be worse, as measured by wage gaps between Whites and Blacks, in the labor market with the highest average level of prejudice against Blacks. True False
False
Investment banks make loans that individuals and businesses use to buy goods or expand business operations, which in turn leads to more deposited funds that make their way to bank True False
False
Lending discrimination occurs when lenders base credit decisions on factors related to the applicant's creditworthiness. True False
False
The capital market is where firms obtain external short term financing. True False
False
The shadow banking system has escaped regulation primarily because it does not accept traditional bank deposits. As a result, many of the shadow banking institutions have been able to employ higher market, credit and liquidity risks, and have higher capital requirements. True False
False
What practice made it impossible for many members of minority groups to qualify for loans to buy and improve homes? Widespread use of credit reports Redlining Blacklining Segregation
Redlining
From "The Big Short," the antagonists (those betting against the big banks) individually or together big banks acted responsibly during the housing market bubble sought to profit from the greed and stupdity of big banks argued there is no diffference between stupid and illegal argued fraud has never worked (long term)
Sought to profit from the greed and stupdity of big banks argued there is no diffference between stupid and illegal argued fraud has never worked (long term)
Suppose Fidelity Investments requires applicants for its financial advisor positions to have the Chartered Financial Analyst (CFA) designation, hires no Black financial advisors, and very few Blacks have the CFA designation. The disparity in Fidelity's hiring of White versus Black financial advisors is most likely attributable to Statisical Discrimination Taste-based discrimination No answer text provided.
Statisical Discrimination
Francis Galton's discovery was small groups of experts are better estimators than large groups of lay persons. than a diverse collection of independently deciding individuals is likely to make better value decisions than individuals or even experts that informed elites, such as himself, should make the really important decisions in society since most people, 'the crowds,' were not educated, enlightened, or smart.
a diverse collection of independently deciding individuals is likely to make better value decisions than individuals or even experts
Why do firms need the financial system? accommodate near term cash inflows and outflows to improve bartering efficiency to facilitate short term cash management policies to obtain long term funds
accommodate near term cash inflows and outflows to facilitate short term cash management policies to obtain long term funds
Financial leverage is borrowing money to amplify the outcome of a ________. deal
deal
The shadow banking system refers to ______________________ involved in facilitating the creation of credit, that is lending, much like traditional banks but are not subject to regulatory oversight.
financial intermediaries
Financial markets are __________ in which suppliers of funds and demanders of funds can transact business directly. trade groups exchanges forums auctions
forums
A liquid market - is all wet has many available buyers and sellers and comparatively low transaction costs is located in a coastal city
has many available buyers and sellers and comparatively low transaction costs
As described in "The 2008 Credit Crisis Visualized," low interest rates incentivized banks to increase leverage caused banks to reduce leverage
incentivized banks to increase leverage
As described in "The 2008 Credit Crisis Visualized," the financial system, commonly known as Wall Street, brings together banks and investors investors and homeowners (borrowers) mortgage brokers and investors
investors and homeowners (borrowers)
What is the hurdle rate? the cost of equity the cost of debt the cost of financing how quickly firms can get loan approavls
the cost of financing
Lending discrimination happens when lenders base credit decisions on factors other than the borrower's creditworthiness, including any of the protected classes defined under federal law. Today, what three federal laws offer protection against lending discrimination? The Civil Rights Act, the Fair Housing Act, and the Equal Opportunity Act The Fair Housing Act, The Community Reinvestment Act, and the Equal Credit Opportunity Act The Fair Housing Act, the Equal Credit Opportunity Act, and the Fair Employment Act The Fair Employment Opportunity Act, the Fair Housing Act, and the Fairness Act
The Fair Housing Act, The Community Reinvestment Act, and the Equal Credit Opportunity Act
A collateralized debt obligation (CDO) bundles house payments and creates safe, okay, and risky investment vehildes. True False
True
An efficient market (Links to an external site.) allocates funds to their most productive uses as a result of competition among wealth-maximizing investors and determines and publicizes prices that are believed to be close to their true value. True False
True
Financial institutions are intermediaries that channel the savings of individuals, businesses, and governments into loans or investments. True False
True
From Professor Charles' youtube talk in the e-text. Professor Charles' research shows that average prejudice levels over the past 50 years have decreased dramatically but wage and promotion differences persist but at a lower level. True False
True
From investors' perspectives, the role of capital markets is to be an efficient market that allocates funds to their most productive uses. True False
True
From" The Inside Job" trailer - One criticism leveled at investment banks following the 2008 financial crisis was they were having massive private gains at the expense of public losses. True False
True
