Midterm Exam
Hello everyone,
Please respond to both questions correctly. Please remember to take time to go over your materials and respond accordingly. Your midterm will be worth 20 points and it will be 2 questions and it is open book: this means that you’ll be able to use your textbook, Ebook, calculators (except online calculators), notes, note cards, formula sheets, and scratch paper.
Question 1.
In 2008, as financial crisis began to unfold the U.S. the FDIC raised the limit on insured losses to bank depositors from $100,000 per account to $250,000 per account. How would this help stabilize the financial system?
Question 2.
If interest rates decline, which would you rather be holding, long-term bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk?