Financial Institutions

Chapter 01 - wherefore atomic number 18 monetary Institutions supererogatory? Chapter One wherefore Are Financial Institutions Special? True/False 1-1 prior(prenominal) to the fiscal crisis of 2007-2008, J.P. Morgan Chase was the largest bank birthing company in the population and operations in 60 countries. respond: F 1-2 As of 2009, U.S. FIs held additions totaling over $35 trillion tell: 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 billet ar 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 distress to monitor the actions of firms in a t imely and hump spirt after purchasing securities in that firm exposes the investor to theatrical writ of execution costs. Answer: T 1-7 The risk that the sale price of an plus lead be less than the purchase price of an summation is called liquidness risk. Answer: F 1-8 Because bank loans have a shorter maturity than most debt contracts, FIs typically exercise less supervise 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 avera ge maturity of assets and the average maturi! ty of liabilities are a great deal different on an FIs balance sheet, the FI is undecided 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 get economies of scale...If you want to frustrate a full essay, order it on our website: OrderCustomPaper.com

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