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Repurchase agreements are used by investment banks as source of liquidity.

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Question 31;Repurchase agreements are used by investment banks as source of liquidity. A bank that wants to borrow funds sells assets to a lender promising to buy the assts back. The sale price is always higher than the repurchase price;True or False?;Question 32;Financial institutions that rely on REPOs are forced to go back to the market regularly to roll over maturing paper. This is a risk to the firm since fear of lenders can create a severe liquidity crisis for the borrowing firm.;True or False?;Question 33;Once Bear Stearns collapsed the spread between the yield on 1 month commercial paper and one treasury bills continued to steadily widen until May of 2009 when it stabilized.;True or False?;Question 34;According to the Financial Accounts of the United States the treasury securities held by security broker-dealers increased by over $500 billion in the fourth quarter of 2008.;True or False?;Question 35;According to the Financial Accounts of the United States, open market paper owned by money market mutual funds declined by $594,156,800,000 in the third quarter of 2008.;True or False?;Question 36;The largest quarterly drop in real GDP since 1979 was in the first quarter of 2009 at -6.4%.;True or False?

 

Paper#29953 | Written in 18-Jul-2015

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