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Financial Crisis and Modern Banking

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Questions and Answers

What is the primary purpose of financing and M&A in investment banking?

To raise capital for clients (correct)
To provide buy/sell/hold recommendations
To facilitate the operation of the capital markets
To provide technical analysis and market risk models

What is the main benefit of project financing in investment banking?

To achieve economies of scale in areas such as research and development (correct)
To make money for shareholders
To provide bond and securities issuance
To gain a larger market share

What is the role of investment banks in the capital markets?

To provide financial trends and forecasting
To provide stock ratings and portfolio balancing
To facilitate the operation of the capital markets alongside exchanges and brokers (correct)
To advise on mergers and acquisitions

What is the primary purpose of syndicate loans in investment banking?

To achieve economies of scale in areas such as research and development (A) Signup and view all the answers

What is the result of the merger between Bank of New York and Mellon Financial Corporation?

BNY Mellon (B) Signup and view all the answers

What is the primary reason for the Originate to Distribute (OTD) model in modern banking?

To move away from issuing products to retain them (D) Signup and view all the answers

What has replaced open out-cry trading in the capital markets?

Electronic trading (D) Signup and view all the answers

What is the main factor that led to the 2008 Financial Crisis?

All of the above (D) Signup and view all the answers

What is the primary function of retail banking?

To provide banking services to individual consumers (D) Signup and view all the answers

What is the role of the central bank in setting interest rates?

To set the interest rates for lending and borrowing between banks (A) Signup and view all the answers

What is the Secured Overnight Financing Rate (SOFR)?

A measure of the cost of borrowing cash overnight collateralized by Treasury securities (D) Signup and view all the answers

What is the main benefit of the Securitization process in banking?

It provides a new source of funding for banks (D) Signup and view all the answers

What type of clients are assumed to be more informed investors and take more financial risks?

Professional clients (D) Signup and view all the answers

What is the purpose of offering research and advisory services for free?

To encourage clients to use other fee-based services (B) Signup and view all the answers

Which of the following is NOT a type of client of an investment bank?

Retail investors (C) Signup and view all the answers

What is an example of a service offered by investment banks to their clients?

Company Restructuring (A) Signup and view all the answers

Who are examples of institutional investors?

Pension funds and insurance firms (D) Signup and view all the answers

What is an example of a type of client that may require wealth structuring services?

Celebrities (D) Signup and view all the answers

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