The liquidity preference theory focuses on the supply of or demand for liquidity assets. Most financial institutions follow this theory and framework.   Select one: True False

Select all that are true reagrding market risk for a bank.     Adverse changes in the relative strength of the business cycle (GDP) negatively impact the investment portfolio, which acts as a hedge to the lending side of the business thus creating market risk.     Market risk includes unexpected events such as COVID.     Since monetary policy has a macro economic effect it does not change overall market risk for the bank.     The level and target of fiscal policy changes the bank's market risk.     International markets have little to no effect on U.S. banking institutions.

Is this statement true or false? Please explain in detail why. Investing in development of people is more important than liquidity.

Discounting refers to the Fed's practice of Multiple Choice O O O Selling securities at the federal funds rate. Purchasing securities at the lowest available federal funds rate. Lending reserves directly to private banks. Lending at the prime rate.

Federal funds are short-term loans made by the Federal Reserve to government agencies such as Fannie Mae and Freddie Mac. A True B) False

Stock market bubbles are welfare enhancing since they relax financial constraints and allows constrained firms to invest in positive NPV projects which was otherwise not possible. Following this finding, a government intent on improving corporate welfare could inject liquidity in the firm finance market and this should boost investment spending for even the constrained firms. Bubbles are essentially liquidity in this framework. Select one: O True O False