Questions from Financial Markets

Q: Explain the advantage of a bullet loan.

Explain the advantage of a bullet loan.

Q: Explain why systemic risk is a source of concern in the bond

Explain why systemic risk is a source of concern in the bond and other debt markets. Also explain how the Financial Reform Act of 2010 was intended to reduce systemic risk.

Q: Describe highly leveraged transactions (HLTs) and explain why regulators closely

Describe highly leveraged transactions (HLTs) and explain why regulators closely monitor a bank’s exposure to HLTs.

Q: Given the higher capital requirements imposed on them, why might banks

Given the higher capital requirements imposed on them, why might banks be even more interested in underwriting corporate debt issues?

Q: Explain the “moral hazard” problem as it relates to deposit

Explain the “moral hazard” problem as it relates to deposit insurance.

Q: How do economies of scale in banking relate to the issue of

How do economies of scale in banking relate to the issue of interstate banking?

Q: How can the financial problems of one large bank affect the market’s

How can the financial problems of one large bank affect the market’s risk evaluation of other large banks?

Q: Why do forecasts of interest rates made by experts differ?

Why do forecasts of interest rates made by experts differ?

Q: If a downward-sloping yield curve is mainly attributed to segmented

If a downward-sloping yield curve is mainly attributed to segmented markets theory, what does that suggest about the demand for and supply of funds in the short-term and long-term maturity markets?

Q: Explain the preferred habitat theory.

Explain the preferred habitat theory.