Answered>Order 14526

Question 21A financial institution is insolvent when the book value of its assets is less than the book value of its liabilities.True or False?Question 22This statement from the 10-K filed by Bear Stearns for the Fiscal year 2007 indicates that management was aware that the firm was exposed to a run by other banks. “An inability to raise money in the long-term or short-term debt markets, or to engage in repurchase agreements or securities lending, could have a substantial negative effect on our liquidity.”True or False?Question 23According to the Financial Accounts of the United States the financial assets of security broker-dealers fell by over $1 trillion in the fourth quarter of 2008.True or False?Question 24Securitization eliminates credit and interest rate from the financial system. This is one of the great benefits of securitization.True or False?Question 25Repo lending is a source of short term capital for financial institutions. When this capital dried up Lehman and Bear switched to equity finance and this caused the stock market to collapse in the spring of 2009.True or False?Question 26The spread between 3 month treasury securities and 3 month financial commercial paper increased from 10 basis points in June of 2003 to 400 basis points in October of 2008.True or False?Question 27Between June of 2008 and December of 2008 financial commercial paper outstanding (Financial commercial paper outstanding (CP/OUTST/DTBSPCKF_N.M) declined from approximately $849 billion to approximately $700 billion.True or False?Question 28Originators of subprime mortgages relied on the repo market to warehouse loans prior to their sale or securtization of the originated assets.True or False?Question 29Commercial bank lending rose by $50 million in the second quarter of 2009.True or False?Question 30Investors extrapolated the favorable default experience of MBS over the years from 2004-2006 into the indefinite future. This caused investors to overpay for MBS. This contributed to the bond bubble that burst in 2008.True or False?