QUESTION The statements above most strongly suggest that if all subprime loan borrowers had taken out the loan that was most appropriate for their needs, then what would follow? A) None of them would have taken out an adjustable loan. B) None of them would have taken out a subprime loan. C) Most of them […]
Date: September 3rd, 2020
QUESTION The NASDAQ Composite Index only tracks the stocks of U.S. technology companies. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The NASDAQ Composite Index tracks domestic and foreign stocks listed on the NASDAQ exchange. Many companies on the NASDAQ are in the high-technology sector.
Date: September 3rd, 2020
QUESTION Suppose that a mortgage broker arranges for a subprime loan for a person who could have qualified for a conventional loan. The possibility of a conventional loan was never mentioned to the customer. Has the mortgage broker violated ethics guidelines? A) No, as long as the mortgage broker did not lie or use coercion […]
Date: September 3rd, 2020
QUESTION The purchase and sale of shares in exchange-traded funds can be executed at any time when the markets are open. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Unlike traditional mutual funds, ETFs can be traded throughout the trading day.
Date: September 3rd, 2020
QUESTION How do commercial banks make money? What will be an ideal response? ANSWER Answer: Commercial banks make money in three ways: (1) by charging interest on loans, (2) by charging fees for other services, and (3) by offering other financial products. Explanation: Commercial banks make money in three ways: (1) by charging interest […]
Date: September 3rd, 2020
QUESTION Why do you think it is important that we have a Federal Reserve Board? What will be an ideal response? ANSWER Answer: The Federal Reserve Board of Governors works with the president’s administration to formulate economic policy. Chief among their responsibilities is to set monetary policy, using interest rates and other tools to […]
Date: September 3rd, 2020
QUESTION What is the reserve requirement? What will be an ideal response? ANSWER Answer: The reserve requirement says that a bank must reserve as cash (as vault cash or in a Federal Reserve bank account) 3% to 10% of whatever funds it has in ordinary checking or savings accounts, called transaction accounts. Explanation: The […]
Date: September 3rd, 2020
QUESTION How do you think derivatives helped cause the 2008 financial meltdown? What will be an ideal response? ANSWER Answer: Derivatives required the use of computers, which led to financial products that were far too complex, making it difficult to properly value them. These complex, difficult-to-value products were then sold to others, and yet […]
Date: September 3rd, 2020
QUESTION Which of the following, if true, undermines Groh’s point about diversification? A) Not every investor can afford every stock. B) The value of some stocks drop and never recover. C) When one stock value drops, others tend to also drop. D) Some investors prefer as little risk as possible when investing. E) The value […]
Date: September 3rd, 2020
QUESTION Which of the following assumptions does Ryerson have to make to support his statements? A) Some people make money by investing. B) Interest is the only thing that changes the value of a savings account. C) Most people want to save money instead of spending it. D) Companies issue stock only if there is […]
Date: September 3rd, 2020
