All of the Following Are Types of Innovative Bonds Except

question 90

Multiple Choice

All of the following are types of innovative bonds except:

• A) preferred stock.
• B) asset-backed bonds.
• C) collateralized debt obligations (CDOs).
• D) mortality bonds.

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Definitions:

Reserve Requirement

The minimum fraction of customer deposits that each bank must hold as reserves, rather than lending out, as mandated by the central bank.

Simple Money Multiplier

A formula that determines the maximum amount of money that banks can create with a given level of reserves.

Excess Reserves

Banks' reserves that exceed the minimum required by the central bank, available for lending or investment.

Interest Rate

The price, expressed as a percentage of the principal, that a borrower must pay a lender for the use of funds.