Question : 21) Prior to 1970, mortgages were ________ resold in the : 1244860

21) Prior to 1970, mortgages were ________ resold in the secondary market. 

A) never

B) rarely

C) often

D) always

22) To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government sponsored enterprises, ________, to sell bonds to investors and use the funds to purchase mortgages from banks.

A) the Fed and the Treasury Department

B) Fannie Mae and Freddie Mac

C) the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC)

D) ACORN and the Federal Housing Administration (FHA)

23) By the 2000s, an important market change occurred when investment banks became significant participants in the secondary market for

A) mortgages.

B) Treasury securities.

C) corporate bonds.

D) currency.

24) By the height of the housing bubble in 2005 and early 2006, lenders had greatly loosened the standards for obtaining a mortgage loan, with many mortgages being granted to sub-prime borrowers ________ and “Alt-A” borrowers ________.

A) with flawed credit histories; who did not document their incomes

B) who borrowed money at rates below the prime interest rate; who had AAA credit ratings

C) who borrowed more than 120 percent of the value of the house; with no proof of U.S. citizenship

D) who purchased homes in depressed housing markets; who purchased homes which were repossessed by government agencies.

25) The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is one of the ways the Fed responded?

A) The Fed banned investment banks from obtaining discount loans.

B) The Fed lent investment banks Treasury securities in exchange for mortgage-backed securities.

C) The Fed lowered the required reserve ratio on demand deposit accounts in order to increase the amount of bank reserves.

D) The Fed helped Citibank to acquire General Motors and Chrysler.

26) Although the Federal Reserve had traditionally made discount loans only to ________, in response to to the financial crisis in 2008 the Fed made primary dealers eligible for discount loans as well. 

A) commercial banks

B) government agencies

C) investment banks

D) mortgage lenders

27) Firms that participate in regular open market transactions with ________ are called primary dealers.

A) commercial banks

B) Treasury banks

C) the Federal Reserve

D) mortgage lenders

28) In 2008, the Treasury and Federal Reserve took several actions in response to the deepening financial crisis. One action was the creation of the Term Securities Lending Facility, under which the Fed will loan up to $200 billion of treasury securities in exchange for

A) stock.

B) mortgage-backed securities.

C) corporate bonds.

D) required bank reserves.

29) In 2008, the Treasury and Federal Reserve took several actions in response to the deepening financial crisis. One action was the Treasury’s move to have the federal government take control of

A) the Federal Deposit Insurance Corporation (FDIC).

B) Fannie Mae and Freddie Mac.

C) JPMorgan Chase.

D) Lehman Brothers.

30) In October 2008, Congress passed the Troubled Asset Relief Program (TARP), under which the Treasury provided ________ to banks in exchange for ________.

A) bonds; cash

B) lines of credit; loan guarantees

C) funds; stock

D) financial advice; promises to expand mortgage lending