Investment Banks Are Vulnerable Because

question 93

Multiple Choice

Investment banks are vulnerable because

• A) the maturity of their liabilities is less than the maturity of their assets.
• B) the maturity of their assets is less than the maturity of their liabilities.
• C) they tend to be underleveraged.
• D) they tend to primarily hold short-term assets.

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Definitions:

Demand For Money

The desire to hold cash or liquid assets instead of investing or spending, influenced by interest rates, financial uncertainty, and economic activity.

Aggregate Demand

The full scale of demand for goods and services in an economy, specified by a common price level across a particular timeframe.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, serving as an indicator of inflation or deflation.

Equilibrium Real GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand, adjusted for inflation.