Yale Finance Class

Question 1

Keynesian economics

Answer 1

Government should boost aggregate demand when there is a depressed private sector (employ people, public spending, tax cuts, transfer $ to people in need)

Question 2

VAR

Answer 2

Value at risk = dollars + probability that these dollars could be lost

Question 3

Stress test

Answer 3

Can a firm withstand an economic crisis?

Dodd Frank requires these for nonbank financial institutions annually

Question 4

Beta (of an equity asset)

Answer 4

Measure of how the stock moves with the market

Question 5

Moral hazard

Answer 5

lack of incentive to guard against risk because on protected by insurance coverage

Question 6

Selection bias

Answer 6

Selecting a sample that is not properly randomized