In the US in 2008, several large banks collapsed when risky financial investments began to fail. Describe this situation in context of systemic risk, and why the bailouts provided create the potential for future moral hazard.

Q: Why can we say that innovation has a ‘systemic’ nature?

A: Innovation: When an idea is being converted into a practical reality it is considered an innovation.…

Q: Argue why,by going mulinational ,corporations can reduce their total business risk

A: corporations that move assets, products, administrations, and abilities across public limits…

Q: systemic risk inhere mainly in the largest financial institution. true or false

A: systemic risk inhere mainly in the largest financial institution - False

Q: How does the “too big to fail” increase moral hazard? Can you cite an example from the 2007- 2009…

A: A financial crisis is when financial instruments and resources decline altogether in esteem.

Q: Why (according to a political economy perspective) do capitalist economies inevitablytend toward…

A: Capitalist economy: - it is that economic system where the price, quantity, and types of goods and…

Q: What do the authors mean when they state that financial intermediaries can achieve economies of…

A: The financial intermediaries reduce the transaction cost when it increases the volume. When the firm…

Q: How coronavirus will dominate African interest rate decisions JOHANNESBURG ‐ Central bankers in five…

A: The repurchase rate is the interest rate at which commercial banks borrow funds from the central…

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A: Given that dividend yields can be used to predict future security returns. According to the…

Q: Discuss the Loss of Transparency and Consumer Sovereignty

A: In an economy, consumers are the ones who create demand for goods and services based on their…

Q: “Fat finger” trades are sometimes blamed as the cause of “flash crashes” in financial markets. What…

A: What is a Flash Crash?  A flash crash can be defined as an occasion in electronic protections…

Q: explain the implications of The O-Ring Model

A: O-Ring Model:- This relates to the idea that even the tiniest elements of a complicated…

Q: explain thoroughly four reasons why it is necessary to regulate banks especially within the context…

A: The covid-19 pandemic has not just impacted our physical health but had a devastating impact on our…

Q: Why aren't more resources being allocated to sufficient prudential oversight of the financial system…

A: Countries where there are more working women, quantity of workers is more.  People who are working…

Q: ceive loans, then the banks face the problem of Group of answer choices moral hazard. adverse…

A: Answer The correct answer is 'Option B' i.e., Adverse Selection.   Explanation Advedse selection…

Q: One of the tasks of a Financial System include providing affordable loans to all consumers and…

A: Allocation of savings into channels of investment in the economy is being done by the financial…

Q: Why was the Term Auction Facility more widely used by financial institutions than the discount…

A: The Term Auction Facility  is a program by Fed  to increase the amount of liquidity in the U.S.…

Q: How does a general increase in uncertainty as a resultof the failure of a major financial…

A: Adverse selection refers to the problem where bad credit risks are more eager to take the loans and…

Q: Why is it a good idea for macroprudential policies torequire countercyclical capital requirements?

A: Macro-prudential policies are policies being financial by nature.

Q: Critically explain each one of the following financial terms: Asymmetric information…

A: When one side of party in a transaction has more information than the other party, this is referred…

Q: Discuss in detail one negative impact of the 2007–2009 Global Financial Crisis and an approach that…

A: Great recession and the causes is complex and involve several forces. The period required to recover…

Q: Would you recommend the adoption of a system ofdeposit insurance, like the FDIC in the United…

A: No, i would not recommend the adoption of a system of deposit insurance, like the FDIC in the United…

Q: Write a one-page summary explaining how adverse selection and moral hazard contributed to the Great…

A: Adverse selection happens in case of information asymmetry or when one of the two parties has more…

Q: If you invest in a foreign company by buying 30 percent of its shares of​ stock, you have engaged in…

A: An investment made by an individual in domestic or foregin company will considered differently in…

Q: he Dodd Frank Act does not address some of the issues related to the financial crisis and recession…

A: Dodd Frank Act came in July 21, 2010 to strengthen the financial system and rules governing it, so…

Q: Provide a detailed analysis of the impact of informational asymmetries on financial markets and the…

A: The situation when one among the two parties tends to possess more information as compared to the…

Q: How can the existence of asymmetric information provide a rationale for government regulation of…

A: Asymmetric information is a situation the information possessed by the parties is not symmetric. In…

Q: The following are the common characteristics of financial intermediaries, except: * a. Providers of…

A: A financial intermediary is an entity acting as a bridge between two parties involved in a financial…

Q: Henry Manne notes that a policy making it easy to fight off hostile takeovers would dilute:…

A: When a corporate business purchases another company due to many reasons like acquisitions, mergers,…

Q: how each Hofstede dimension can contribute to or discourage business corruption in Egypt? In Turkey

A: Hofstede dimension is a theory that is aimed at improving cross cultural communication.

Q: True or false When financial intermediaries deleverage, firms cannot fund investment opportunities…

A: An individual or an institution which behaves as a middleman among parties for facilitating…

Q: You are the Chairman of the Board of Resilient National Bank. Your job is to conduct a critical…

A: Low interest rates, regulation, and the bank's business strategy are all factors to consider.…

Q: implication

A: According to Keynes, the consumption of individual and society are determined by the current income…

Q: Examine present values, future values, and efficient market hypothesis. • Synthesize knowledge of…

A: Answer -  Asymmetric information  -  This is situation where one party has information advantage…

Q: The 1999 repeal of the Glass-Steagall Act by the US Government was a mistake as it allowed US banks…

A: With the endorsement of numerous in the banking industry, Congress revoked the Glass-Steagall Act in…

Q: what are four reasons why it is necessary to regulate banks, within the context of the COVID…

A: Explanation: 4 reasons why it's necessary to regulate banks during the Covid-19 pandemic :      1.…

Q: In the table, suppose the equal probabilities for weak economy and strong economy. Security B pays…

A: (a) Market price of security B = 1280-1000 = 280 as the probabilities are supposed to be equal for…

Q: Critically assess the contribution of the bonus culture, asymmetric information and risk taking to…

A: There were a lot of factors that together led to the financial crisis of 2008.Financial crisis of…

Q: Regulatory capture is more likely to occur when the regulatory agency has individual members who…

A: Answer - "Thank you for submitting the question.But, we are authorized to solve one question at a…

Q: For a long time, the International Monetary Fund (IMF) has had its supporters and detractors. In…

A: IMF, the international monetary fund is an international organization of 189 member countries that…

Q: If not for a great deal of corporate wrongdoing, there would probably be no FCPA. True or False?

A: FCPA (Foreign Corruption Protection Act) mainly stands for the law related to corruption. FCPA was…

Q: What are some of the O-ring model's application to everyday society?

A: O-Ring Theory:It is an economic development model that is otherwise known as an O-ring model. It…

Q: How can asymmetric information problems lead to abank panic?

A: Asymmetric information refers to the situation when there is a lack of information in the market…

Q: An understanding of the adverse selection and moral hazards can help us better understand financial…

A: Moral Hazard:- It can be explained as a situation where one party shares incorrect details of alters…

Q: The government safety net creates ________ problem because risk -loving entrepreneurs might find…

A: Government safety net refers to the phenomenon in which a guarantee is given by the government that…

Q: The 2016 elections in the United States Multiple Choice led to resistance to Dodd-Frank becoming…

A: In the political election of 2016 of the United States, Donald Trump won the leadership against Dodd…

Financial Institutions and Federal Bank

The word financial institution is a kind of business organization that deals with the financial activities of a nation. These activities include accepting deposits, making payments, granting loans and advances, transferring funds, holding shares, providing credits, purchasing and selling foreign exchanges, investments in shares, futures commodities, and many more.