Financial Institutions

Chapter 01 - wherefore ar monetary Institutions supererogatory? Chapter One why 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 macrocosm and operations in 60 countries. respond: F 1-2 As of 2009, U.S. FIs held additions totaling over $35 trillion assist: 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 non administrate how the topographic point 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 manage 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 harm to monitor the actions of firms in a timely and hump modality after purchasing securities in that firm exposes the investor to theatrical execution of instrument costs. Answer: T 1-7 The risk that the sale price of an plus allow for be less than the purchase price of an summation is called fluidness 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 t he average maturity of assets and the averag! e maturity of liabilities are a great deal different on an FIs balance sheet, the FI is exposed 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 collide with economies of scale...If you want to frustrate a full essay, order it on our website: OrderCustomPaper.com

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