1. Ben Bernanke stated that LSAPs are also known as

Select one: A. Limited Security Adjustment Programs B. Large Scale Asset Purchases C. Quantitative Easing D. Both B and C are correct

CDOs are:

I. Are known as Credit Default Obligations

II. Pay out cash flows from credit default swaps

III. Usually pay out the lowest-rated tranche first

Select one: A. I only B. I and II only C. I, II and III only D. none of the above

2. According to Ben Bernanke, Fannie Mae and Freddie Mac were vulnerable because

A. they chose not to expand their balance sheets when necessary

B. they would not guarantee their mortgage-backed securities against loss

C. they were permitted to operate with inadequate capital to back their guarantees

D. they were public corporations that had the direct guarantee of the US government

Near the peak of the housing boom:

I. Less than half of all new mortgages were being securitized

II. Fannie Mae and Freddie Mac continued to increase their percentage of total mortgages being securitized

III. The total percentage of new mortgages being securitized was declining

A. I and II only B. I and III only C. II and III only D. I, II, and III E. None of the above

3. Which of the following statements is true concerning so-called "shadow banking?"

I. A significant amount of financing is being done in the "shadow banking" sector

II. The regulatory structure of shadow banking has kept pace with the financial innovation of the past twenty-five years

III. It is illegitimate to place any blame for the U.S. financial crisis of 2008-2009 on shadow banking, since this crisis would likely have occured anyway

Select one: A. I only B. II only C. III only D. I and III only E. II and III only