1. __________ are not considered shadow banks.
a. Money-market mutual funds
b. Brokerages
c. Credit unions
d. Insurers
2. Financial institutions:
a. are required for all financial transactions.
b. reduces information asymmetry associated with borrowing and lending.
c. increase transactions costs for borrowers and lenders.
d. lowers liquidity for savers.
3. The sooner the promised payment on a financial instrument then the:
a. greater the risk and the less valuable the promised payment.
b. less valuable the promised payment since time is valuable.
c. less likely, and therefore the less valuable, the promised payment.
d. the more valuable the promised payment since time has an opportunity cost.
4. A bank with $100 million in assets and $10 million in equity increases its assets by adding $1 to capital for every $1 added to assets then the:
a. assets-to-equity ratio increases.
b. debt-to-equity ratio will increase.
c. debt-to-equity ratio will remain constant.
d. debt-to-equity ratio will decrease.