Financial Institutions

Chapter 01 - wherefore be monetary Institutions supererogatory? Chapter One wherefore Are Financial Institutions Special? True/False 1-1 prior(prenominal) to the monetary crisis of 2007-2008, J.P. Morgan Chase was the largest bank birthing company in the piece and operations in 60 countries. respond: F 1-2 As of 2009, U.S. FIs held additions totaling over $35 trillion dissolving agent: T 1-3 Financial institutions act as intermediaries between suppliers and demanders of money. Answer: T 1-4 If a household invests in corporate securities and does not administrate how the office are invested or used by the corporation, the take chances of not earning the desired return or not having the funds returned increase. Answer: T 1-5 If not done by FIs, the handle of do the actions of borrowers would reduce the attractiveness and increase the risk of investiture in corporate debt and equity by individuals. Answer: T 1-6 chastening to monitor the actions of firms in a ti mely and hump means after purchasing securities in that firm exposes the investor to theatrical implementation costs. Answer: T 1-7 The risk that the sale price of an plus volition be less than the purchase price of an asset is called fluidness risk. Answer: F 1-8 Because bank loans have a shorter maturity than most debt contracts, FIs typically exercise less observe power and control over the borrower.

Answer: F 1-9 FIs typically provide secondary claims to household savers that have inferior liquidity than primary securities of corporations such as equity and bonds. Answer: F 1-10 Because the average matu rity of assets and the average maturity of l! iabilities are a great deal different on an FIs balance sheet, the FI is opened to liquidity risk. Answer: F 1-11 When an FI functions as a broker, they are selling a financial asset that they have created and will continue to hold on their balance sheet. 1-1 Chapter 01 - Why Are Financial Institutions Special? Answer: F 1-12 An FI acting as an agent in matching savers and borrowers of funds can run across economies of scale...If you want to frustrate a full essay, order it on our website: OrderCustomPaper.com

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