the economics of money, banking, and financial markets

310 $

© 2014 Pearson Canada Inc.$

28. 
    

    ____ is creating a marketable capital market instrument by bundling a portfolio of
    mortgage or auto loans.
    A) Diversification
    B) Arbitrage
    C) Computerization
    D) Securitization
    Answer: D
    Diff: 1 Type: MC Page Ref: 247
    Skill: Recall
    Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
    system"

    
    


29. 
    

    The driving force behind the securitization of mortgages and automobile loans has been
    ____.
    A) the rising regulatory constraints on substitute financial instruments
    B) the desire of mortgage and auto lenders to exit this field of lending
    C) the improvement in computer technology
    D) the relaxation of regulatory restrictions on credit card operations
    Answer: C
    Diff: 2 Type: MC Page Ref: 247
    Skill: Recall
    Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
    system"

    
    


30. 
    

    According to Edward Kane, because the banking industry is one of the most ____
    industries in America, it is an industry in which ____ is especially likely to occur.
    A) competitive; loophole mining
    B) competitive; innovation
    C) regulated; loophole mining
    D) regulated; innovation
    Answer: C
    Diff: 2 Type: MC Page Ref: 247
    Skill: Recall
    Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
    system"

    
    


31. 
    

    Loophole mining refers to financial innovation designed to ____.
    A) hide transactions from the CRA
    B) conceal transactions from the Bank of Canada
    C) get around regulations
    D) conceal transactions from the Department of Finance
    Answer: C
    Diff: 2 Type: MC Page Ref: 247
    Skill: Recall
    Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
    system"