Money Banking and Financial Markets

Topics: Asset, Depreciation, Investment Pages: 3 (1017 words) Published: February 15, 2012
UNIVERSITY OF TORONTO Faculty of Arts and Science APRIL 2011 EXAMINATIONS ECO351S

Duration - 2 hours

G. Georgopoulos

Aids Allowed: Non-Programmable Calculators Answer All Questions

Total Marks: 100

Please put your name and student number below

Name:

__________________________________________________

Student Number:

_____________________________________________

 
PART 1.    Multiple Choice. 30 MARKS (2 marks each). Choose the one alternative that best completes the statement or  answers the question by clearly circling the correct letter option.    ___________________________________       1)  The primary difference between the ʺpayoffʺ and the ʺpurchase and assumptionʺ methods of       handling failed banks is    A)  that the CDIC is more likely to use the purchase and assumption method for small    institutions because it will be easier to find a purchaser for them compared to large  institutions.    B)  that the CDIC is more likely to use the ʺpayoffʺ method when the bank is large and it fears    that depositor losses may spur business bankruptcies and other bank failures.    C)  that the CDIC guarantees all deposits when it uses the ʺpurchase and assumptionʺ method.      D)  that the CDIC guarantees all deposits when it uses the ʺpayoffʺ method.         2)  Regulators attempt to reduce the riskiness of banksʹ asset portfolios by         A)  encouraging banks to hold risky assets such as common stocks.      B)  requiring collateral for all loans.      C)  establishing a minimum interest rate floor that banks can earn on certain assets.      D)  limiting the amount of loans in particular categories or to individual borrowers.         3)  Large-denomination CDs are ________, so that like a bond they can be resold in a ________       market before they mature.    A)  negotiable; secondary      B)  nonnegotiable; primary      C)  nonnegotiable; secondary      D)  negotiable; primary         Assets R e-sensitive $20 million at Fi...
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