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| 5421741174 | Moral Hazard | after loan is made, borrower may and has incentive to, engage in actions that increase default risk | 0 | |
| 5421741957 | principal-agent problem | manager may not have incentive to maximize profits | 1 | |
| 5421742613 | agent | an example would be a CEO | 2 | |
| 5421742614 | principal | an example would be a stockholder | 3 | |
| 5421746401 | audit, regulation, intermediation, market for corporate contro, loss of capital, covenants | please name some ways to address moral hazard | 4 | |
| 5421746986 | Ponzi Scheme | an agent lures funds from principals by promising insane gains but can only work if more people join | 5 | |
| 5421748432 | financial innovation | intermediaries have shown the ability to respond to new regulatory and market dynamics | 6 | |
| 5421749971 | adjustable rate mortgage | interest rate adjusts with market standard | 7 | |
| 5421750556 | regulation Q | stimulated the introduction of NOW and MM bank accounts | 8 | |
| 5421752617 | Germany | this country has low rates of credit use and is generally credit averse | 9 | |
| 5421753722 | liquiditiy management | a bank seeks to maximize net income under the constragnt of maintaining sufficient ______ | 10 | |
| 5421755065 | debt managment | profit margin will be affected by the bank's exposure to interest rate risk in assets and liabilities | 11 | |
| 5421756055 | capital management | a bank seeks to maximize the risk of insolvency | 12 | |
| 5421757638 | diversift across markets maximize liquidity through securitization screen borrowers to address adverse selection enforce loan contracts to avoid moral hazard | asset/risk management techniques | 13 | |
| 5421760757 | avoiding insolvency keeping a strong capital adequacy ratio | what's important in capital management | 14 | |
| 5421761803 | Tier 1 capital | includes preferred stock and non controlling interest | 15 | |
| 5421762237 | Total capital | includes tier 1 and tier 2 capital | 16 | |
| 5421762661 | Tier 2 capital | subordinated debt and secondary funds | 17 | |
| 5421763946 | net income/equity | ROE equation | 18 | |
| 5421763947 | net income/assets | ROA equation | 19 | |
| 5421765300 | the lower the shareholders ROE will be | if a bank has a higher capital ratio | 20 | |
| 5421766453 | 10% | checking and savings deposits are subject to this requirement percentage | 21 | |
| 5421768125 | borrowing from the Fed | this is a last ditch option to gain additional funds | 22 | |
| 5421769363 | an interest rate increase will reduce net income | if a bank has more exposure to rate sensitive liabilities than rate sensitive assets | 23 | |
| 5421771802 | ! | know how to conduct gap analysis | 24 | |
| 5421773004 | Macaulay's duration | a measurement of risk sensitivity | 25 | |
| 5421774819 | shells | example of wampum | 26 | |
| 5421775387 | gold and silver coins; spanish eight-real silver coins | an example of specie | 27 | |
| 5421775388 | tobacco, hide, corn | examples of country pay | 28 | |
| 5421776842 | bills of credit issued by banks as mortgage loans bills of credit issued by treasuries against future reciepts | two forms of colonial paper notes | 29 | |
| 5421780131 | war expenses | why were bills of credit originally issued | 30 | |
| 5421781066 | Coinage act of 1792 | adopted the dollar as a unit of account | 31 | |
| 5421782959 | distance from the bank of issue reputation of the bank whether bank is specie-paying | notes being accepted at discount or face value were dependent on these factors | 32 | |
| 5421784413 | first bank in 1792 | Hamilton made this with a 20-year charter | 33 | |
| 5421785636 | could lend to treasury could lend to state-chartered banks could buy-up notes | functions of the first bank | 34 | |
| 5421786548 | 1811 under Jefferson | the first bank charter lapsed in this year because of this guy | 35 | |
| 5421788571 | insurance | this grew sharply as the number of banks increased from 88 to 250 | 36 | |
| 5421790619 | war of 1812 | this prompted a new bank in 1816 | 37 | |
| 5421792634 | lender of last resort of banks by maintaining large specie reserves presented state notes to the banks for redemption in specie | two goals of the second bank(Nicholas Biddle) | 38 | |
| 5421797615 | Andrew jackson vetoed a bill to renew the banks charter | what caused the end of the second bank | 39 | |
| 5421799437 | laws in many states were very lax anyone could apply for charter wildcat banking | the free banking era | 40 | |
| 5421821912 | Forstall System(1842) | banks were required to keep specie equal to 1/3 of notes and deposits old charters could be renewed but new charters were seldom given | 41 | |
| 5421825178 | financing was done with interest bearing US treasury bonds which circulated much like currency "greenbacks" were introduced | paying for the civil war included what | 42 | |
| 5421827593 | National bank act of 1863 | occurred because of a need for treasury bond market | 43 | |
| 5421831103 | controller of the curency | enforced the national bank act of 1863 | 44 | |
| 5421831956 | duel banking | less reliant on notes and preferring relatively lax state banking laws, state banks saw little advantage in converting to national status this happened because of this | 45 | |
| 5421834877 | Glass-Steagall | did not allow banks to participate in other financial services such as securities underwriting | 46 | |
| 5421836143 | Financial services modernization act(1999) | permitted the merger of banks | 47 | |
| 5421837278 | Dodd-Frank | legislation was passed after housing crisis banks were designated as SIFI which are subject to stricter capital and liquidity requirements FSOC oversees this | 48 | |
| 5421840446 | Volker rule | banks could not hold a lot of equity in hedge funds or private equity | 49 | |
| 5421843023 | issue reserve notes lend reserves to banks enforce regulation trade in currency(foreign) manage money supply | name some roles that the Fed has | 50 | |
| 5421862581 | treasury securities discount loans gold, currency, etc float | assets on the feds balance sheet | 51 | |
| 5421863404 | federal reserve notes bank's reserve accounts treasury accounts capital | liabilities on the feds balance sheet | 52 | |
| 5421865949 | m= c+1/r+e+c | money multiplier function | 53 | |
| 5421870614 | monetary supply goes up | if non borrowed monetary base goes up | 54 | |
| 5421871649 | monetary supply goes down | if RR goes up | 55 | |
| 5421872257 | monetary supply goes up | if borrowed reserves goes up | 56 | |
| 5421872950 | monetary supply goes down | if excess reserves go up | 57 | |
| 5421873624 | monetary supply goes down | if currency holdings go up | 58 | |
| 5421877539 | an increase in the excess reserve ratio | in 2008, the monetary base raised so much because of | 59 | |
| 5425998869 | McFadden act of 1972 | prohibits banks from chartering across state border | 60 | |
| 5426054760 | superregional bank | bank that is not located in a money center city but is similar in size | 61 | |
| 5426062024 | economics of scope | ability to use one resource to provide different products and services | 62 | |
| 5426088559 | Riegle Neal Act | repealed prohibition of interstate banking | 63 | |
| 5426097738 | Gramm Leach Bailey Act of 1999 | opened banks to consolidation within banking and also across other financial institutions | 64 | |
| 5426109666 | Gramm Leach Bailey | repealed Glass Steagal | 65 | |
| 5426132835 | Federal home loan banking system | is responsible for savings and loan associations | 66 | |
| 5426137316 | mutual savings banks | this is an example of a thrift institution | 67 |
