[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-394187-105":59,"doc-detail-394187-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","econ-252-financial-markets-final-exam-practice-exam-suggested-solution","Econ 252 - Financial Markets - Final Exam – Practice Exam Suggested Solution","","Lecture-based notes and suggested answers for the Econ 252 Final Exam from Spring 2011. The material summarizes key concepts across public and non-profit finance, market intermediaries, factor models and excess returns, trust and money-management roles, banking panic mechanics via repo markets, monetary policy transmission through reserve and capital requirements, credit rating agency incentives, behavioral finance’s role of social praise, securitization and the lemons problem, inflation-indexed coupon structures, investment banking culture, and load fund sales charges and tax-exemption risks.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":20,"@type":76,"position":81},"https://docshare.wps.com/document/exam/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/econ-252-financial-markets-final-exam-practice-exam-suggested-solution/394187/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/econ-252-financial-markets-final-exam-practice-exam-suggested-solution/394187.png","ImageObject",300,407,{"name":92,"@type":93},"eBook King","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-01","2026-09-26",true,{"@type":102,"interactionType":103,"userInteractionCount":44},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What is the main economic difference between nonprofits and for-profits regarding equity and profit use?","Question",{"text":112,"@type":113},"With a nonprofit, there is no equity and all profits are held in the organization for the nonprofit’s stated purposes. Nonprofits still have debt and operate under incentives that make them behave similarly to for-profits in labor and service markets.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How do repurchase agreements (the repo market) relate to demand deposits and the 2007–2009 panic?",{"text":117,"@type":113},"The 2007–2009 panic is described as a run on the sale and repurchase market. Repo agreements are economically similar to demand deposits because they provide collateralized, short-term financing that plays the same role as demand deposits for firms operating in capital markets.",{"name":119,"@type":110,"acceptedAnswer":120},"Why does securitization help address the “lemons problem” in markets for securities?",{"text":121,"@type":113},"The notes argue that securitization helps solve the lemons problem by reducing information costs. By dividing a company’s securities into pieces evaluated by specialized evaluators, investors need less research to determine value, making a market feasible for “informationally sensitive” securities.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},394187,1790673484,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":19,"category_name":20,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":44,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":56,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},962088006270,"https://ap-avatar.wpscdn.com/davatar_085a072bc5b1113ac321206ff7593b45","Econ 252 - Financial Markets  \nSpring 2011  \nProfessor Robert Shiller  \n# Final Exam – Practice ExamSuggested Solution\n\n## Part I.\n\n### 1. Lecture 22 on “Public and Non-Profit Finance.”\n\nWith a nonprofit, there is no equity. All profits are held in the company, to be used forthe stated purposes of the nonprofit. Nonprofits do have debt. Nonprofits do payemployee bonuses (42% did so in 2007-8) . Nonprofits have to compete with for -profits in the market for the services they sell and in the labor market for theemployees they hire, and so there are incentives that push them together to behavesimilarly to eachother.  \n### 2. Lecture 21 on “Exchanges, Brokers, Dealers, Clearinghouses.”\n\nShe is a dealer, since she is charging no commission, but is profiting from the spreadbetween the price she paid and the price she sold to you, rather than being paid acommission for helping you buy from the third party.  \n### 3. Fabozzietal., p. 257.\n\nExpected excess return is equal to the expected excess return on each of a number offactor portfolios, each multiplied by its own factor beta.  \n### 4. Lecture 20 on “Professional Money Managersand their Influence.”\n\nA trust company holds assets for another party and manages and distributes themaccording to the instructions left by that party. Trusts will survive the death of theparty.  \n### 5. Guest lecture by Laura Cha.\n\nShe said regulation is well-developed in China today, but enforcement is inconsistent.China is developing so fast that it cannot keep up with enforcing all the regulations. Butthe regulation is better than that of the U.S. not long ago. China isthe largest recipientof foreign direct investment and so it must be that foreigners are trusting of Chineseregulations.  \n### 6. Lecture 13 on “Banks.”\n\nThe Panic of 2007-2009 was essentially a run on the sale and repurchase market (the“repo”market), which is a very large, short-term market that provides collateralizedfinancing for a large range of securitized products. Repurchase agreements areeconomically like demand deposits; they play the same role as demand deposits, butfor firms operating in the capital markets.  \n### 7. Fabozzietal., p. 83.\n\nOperating targets are monetary and financial variables (such as federal funds rate orexchange rate) whose changes tend to bring about changes in intermediate targets,which may include long-term interest rates or monetary aggregates.  \n### 8. Lecture 18 on “Monetary Policy.”\n\nReserve Requirements are related to the shortest run problems, runs on banks, forwhich banks need vault cash or an account at the central bank. Capital requirementsare more long-term, about the banks’assets declining in value. Reserve requirementsagainst saving account (time deposit) balances are only 1% . Reserve requirementsagainst checking accounts can be 10% . Some governments do not impose reserverequirements. Basel III imposes capital requirements on banks of all G-20 countries.  \n### 9. Lecture 13 on “Banks.”\n\nRating agencies give letter grades (such as AAA for the best) to securities regardingtheir probability of default. Rating agencies have been criticized for allowingthemselves to be influenced, in the awarding of these grades, by fees paid to them byissuers, and giving high ratings to securities that later defaulted.  \n### 10. Lecture 11 on “Behavioral Finance andthe Role of Psychology.”\n\nAdam Smith, people have a desire for praise. But they don’t enjoy being praised forsomething they did not do. As people mature, if they mature successfully, the desire forpraise morphs into a desire for praiseworthiness. The financial world functions as wellas it does because thereis this desire.  \n### 11. Shiller manuscript, chapter 8.\n\nClaire Hill, in her article “Securitization: A Low-Cost Sweetener for Lemons,” offered asa reason that the securitization market exists that it helps solve the “lemons problem”defined by George Akerlof, that there is no market for (in Gorton’s words)“informationally sensitive” securities. Investor","cbCaigE5Uf2tsO46","https://ap.wps.com/l/cbCaigE5Uf2tsO46","pdf",976514,"English","# Part I\n## Lecture 22 on Public and Non-Profit Finance\n## Lecture 21 on Exchanges, Brokers, Dealers, Clearinghouses\n## Fabozzi et al., p. 257\n## Lecture 20 on Professional Money Managers and their Influence\n## Guest lecture by Laura Cha\n## Lecture 13 on Banks\n## Fabozzi et al., p. 83\n## Lecture 18 on Monetary Policy\n## Lecture 13 on Banks (Rating Agencies)\n## Lecture 11 on Behavioral Finance and the Role of Psychology\n## Shiller manuscript, chapter 8\n## Fabozzi et al., p. 295\n## Lecture 19 on Investment Banks\n## Fabozzi et al., p. 126\n## Fabozzi et al., p. 326\n## Fabozzi et al., p. 279","[{\"question\":\"What is the main economic difference between nonprofits and for-profits regarding equity and profit use?\",\"answer\":\"With a nonprofit, there is no equity and all profits are held in the organization for the nonprofit’s stated purposes. Nonprofits still have debt and operate under incentives that make them behave similarly to for-profits in labor and service markets.\"},{\"question\":\"How do repurchase agreements (the repo market) relate to demand deposits and the 2007–2009 panic?\",\"answer\":\"The 2007–2009 panic is described as a run on the sale and repurchase market. Repo agreements are economically similar to demand deposits because they provide collateralized, short-term financing that plays the same role as demand deposits for firms operating in capital markets.\"},{\"question\":\"Why does securitization help address the “lemons problem” in markets for securities?\",\"answer\":\"The notes argue that securitization helps solve the lemons problem by reducing information costs. By dividing a company’s securities into pieces evaluated by specialized evaluators, investors need less research to determine value, making a market feasible for “informationally sensitive” securities.\"}]","Econ 252 - Financial Markets - Final Exam – Practice Exam Suggested Solution | PDF",1790399865,48]