During the class lecture we learned that the U.S. commercial paper market collapsed during the 2008 Financial Crisis. --- Commercial paper are simply unsecured notes that large corporations sell to investors. This is a common method that large firms use to raise quick cash without having to make a formal bank loan application. During 2008-2009, the Federal Reserve Bank was forced to enter into this marketplace to buy commercial paper in order to prevent the crisis from getting worse. (Free Gift: Mark True - This Is True

During the class lecture we learned that the U.S. commercial paper market collapsed during the 2008 Financial Crisis. --- Commercial paper are simply unsecured notes that large corporations sell to investors. This is a common method that large firms use to raise quick cash without having to make a formal bank loan application. During 2008-2009, the Federal Reserve Bank was forced to enter into this marketplace to buy commercial paper in order to prevent the crisis from getting worse. (Free Gift: Mark True - This Is True

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 12C: Researching GAAP Situation Hamilton Company operates in an industry with numerous competitors. It is...

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Consider the simple Financial Intermediary (FI) balance sheet as shown below (in millions of dollars). Before the withdrawal Cash Assets Corporate Loans Total Amount $30 $170 $200 Liabilities/Equity Amount Deposits Equity Total $170 $30 $200 Suppose that depositors unexpectedly withdraw $70 million in deposits and the FI receives no new deposits to replace them. Assume that the FI cannot borrow any more funds in the short-term money markets, and because it cannot wait to get better prices for its assets in the future (as it needs the cash now to meet immediate depositor withdrawals), the FI has to sell any nonliquid assets (corporate loans) at 75 cents on the dollar. What will be the equity (in millions of dollars) of the FI after adjustments are made for the $70 million of deposit withdrawals? Assume no minimum cash reserve requirements.
Which of the following did NOT help trigger the subprime crisis in 2007? Housing prices stopped climbing and actually started falling around 2006 Borrowers were offered teaser loans like 2/28 to get them into loans they could not otherwise qualify for Mortgage brokers were required by Sarbanes Oxley to personally pledge that all the loan information provided on loan applications was correct and they could be held personally responsible for any losses due to fraud Banks made loans to borrowers with very questionable income by using “liar loans”
Which of the following was NOT a direct and major consequence of the 2007-2009 U.S. Subprime Financial Crisis? a. Small consumer and household savers lost all their money they had in savings accounts due to the failure of many smaller FDIC member banks b. Many people lost their homes when they could no longer make their payments after their subprime mortgage rates reset to a much higher rate after two years c. Lehman suffered a major financial collapse and ultimately was dissolved after many of its remaining parts were purchased by Barclays and Nomura, among others d. The U.S. stock markets dropped dramatically as the credit fueled economy of the mid-2000s started to suffer after the credit bubble began to burst.
Which of the following was NOT a direct and major consequence of the 2007-2009 U.S. Subprime Financial Crisis? Group of answer choices a. Small consumer and household savers lost all their money they had in savings accounts due to the failure of many smaller FDIC member banks b. Many people lost their homes when they could no longer make their payments after their subprime mortgage rates reset to a much higher rate after two years c. Lehman suffered a major financial collapse and ultimately was dissolved after many of its remaining parts were purchased by Barclays and Nomura, among others d. The U.S. stock markets dropped dramatically as the credit fueled economy of the mid-2000s started to suffer after the credit bubble began to burst.
At the beginning of the mortgage crisis, 2006-2009 recession, some investment banks like Goldman Sachs, were allowed to change their banking charters from an investment bank to a commercial bank (like Citibank), O A. To have access to the Federal Reserve Discount Window O B. To be able to borrow money at low interest rates from the Federal Reserve Bank O C. To avoid bankruptcy O D. All of the above
Dureing the recession of 2006-2009, Goldman Sachs changed their banking charter from an Investment Bank to a Commercial Bank to have access to the Federal Reserve Discount Window to avoid bankrupcy. O True O False
Suppose that, as a result of increased use of electronic payments, banks no longer need to hold as much vault cash. Banks decide to reduce their vault cash holdings by $250million. a) Show the effects this would have on the balance sheets of commercial banks and the central bank. b) If, at the same time, depositors decide to reduce their cash holdings by $50million by depositing that amount with their banks, show the combined effect of these decisions on the balance sheets of commercial banks.
Even though deposit insurance existed, the United States experienced a major financial crisis from 2007 to 2009 because: there was a run on shadow banks, which were not covered by deposit insurance. there was excess competition from other countries.
Evaly, an e-commerce company in Bangladesh, has been in the news for the last few months for its delinquency in delivering customers' orders. Evaly has liabilities of 543 crore Taka against assets of 121 crore Taka. In your opinion, should the Bangladesh Bank intervene? Why, or why not? Please explain your rationale. Note: Please answer shortly using concepts of finance
Too Big to Fail - During the recession of 2008, we were introduced to this new term. A large bank or financial institution that engages in illegal activity many are not severely punished or have its officials charged with criminal activity. Why? What is the reason?
The COVID-19 pandemic has affected one of your customers, NEST Ltd adversely. Even though the economies are fast recovering, they have contacted your company to request to purchase on credit instead of cash on delivery. Your boss, Alan, the Marketing Manager has instructed you to review their request. He has asked you to review NEST Ltd’s latest set of financial statements. (a)In addition, identify other information(other than balance sheet, incomes statement and cash flow statement) that will be helpful in deciding whether to accede to NEST Ltd’s request? (b)You have also noticed that compared to last year, the allowance for bad debt for Nest Ltd has increased from 2% to 4 % of the accounts receivable. Discuss how this information will impact your review.
You have been given the banking and financial data in the following table. Your boss wants you to calculate the M1 money multiplier (using the U.S. laws and regulations) but forgets to tell you which year the data pertain to. You call your boss and she tells you that the data is for 2018. In that case, you calculate the following for your boss: Currency in Circulation Demand Deposits Savings Deposits Small Time Deposits (Less than $100,000) Large Time Deposits (Greater than $100,000) Money Market Mutual Funds Deposits Owned by Individuals Money Market Mutual Funds Deposits Owned by Institutions Total Reserves in the Banking System a. m = 0.30 b. m = 0.50 O c. m = 0.75 d. m = 1.50 e. m = 2.50 $100 $1,000 $4,400 $2,000 $4,000 $1,000 $5,000 $2,100