FIN 3244 Study Guide - Quiz Guide: Federal Deposit Insurance Corporation, Shadow Banking System, Money Market Fund
Document Summary
In your answer, be sure to define repo financing and leverage. Answer: repo financing is a way of borrowing funds through the use of repurchase agreements. Repos are short-term loans with the securities serving as collateral. Leverage is the financing of investments by borrowing rather than using capital. Investment banks became more reliant on repo financing and more highly leveraged because by the. 1990s most of these banks had converted from partnerships to publicly traded companies. Answer: the large stand-alone investment banks either went bankrupt, were taken over, or converted to bank holding companies to obtain access to federal. Answer: investment institutions are similar to commercial banks because they are financial intermediaries that raise funds and invest them in loans and securities. Answer: contractual savings institutions are similar to commercial banks because like all financial intermediaries, they raise funds and invest them in loans and securities.
