Define terms

Federal Funds Rate
Gramm Leach Bliley Act
Pension Benefit Guaranty Corporation
interest rate risk

Question 12

12) Evaluate the following statement:
The political independence of the Fed is unique to the central bank of the United States.

Question 11

11) Evaluate the following statement:
Financial markets were pleased with the appointment of Ben Bernanke by President Bush to be Chair of the Board of Governors because he is seen as likely to keep the Fed politically independent.

Question 10

10) Evaluate the following statement:

Differences in financial systems between the United States and Japan helps explain differences in executive salaries between the two countries.

Question 9

9) Evaluate the following statement:
Limited liability reduces stockholder lender conflict.

Question 8

8) Evaluate the following statement.
There is no morale hazard problem associated with deposit insurance.

Question 7

7) Evaluate the following statement.
Collateral is a way for borrowers to overcome problems of asymmetric information.

Question 6

6) Compare and contrast the impact of sweep accounts and the federal funds market on the amount of excess reserves banks hold.

Question 5

5a) Could the Federal Reserve dramatically reduce the use of sweep accounts by requiring reserves to be held on Money Market Deposit Accounts? Explain.
b) If they could do this why don't they?

Question 4

4) Evaluate the following statement.
Sarbanes Oxley is consistent with a fundamental change in the approach to the regulation of financial markets in the United States.

Question 3

3) Evaluate the following statement.
The cost to the NYSE to merge with Archipelago Holdings was reduced by increased regulation of the NYSE by outsiders.

Question 2

2) Explain how the proposed regulation is designed to keep the dual banking system from fading into history.

Question 1

1) Explain how the proposed regulation reflects tension arising from the dual banking system in the era of interstate banking.

Information for questions 1 and 2 from exam 2.

The FDIC has recently proposed the following change in regulation:

Regarding the applicability of the law of a host state (i.e., a state other than the bank's home state), generally, the proposed rules would clarify that a host state law does not apply to an activity that involves a branch in the host state of an out of state, state chartered bank to the same extent that a federal court or the OCC has determined in writing that the particular host state law does not apply to an activity involving a branch in the host state of an out of state national bank. When host state law does not apply, then the proposed rules would provide that the bank's home state law applies.