True, false, or uncertain: Financial engineering always leads to a more efficient financial system.
Answer to relevant QuestionsHoe did a decline in housing prices help trigger the subprime financial crisis starting in 2007?Because diversification is a desirable strategy for avoiding risk, it never makes sense for a bank to specialize in making specific types of loans. Is this statement true, false, or uncertain? Explain your answer.If the bank you own has no excess reserves and a sound customer comes in asking for a loan, should you automatically turn the customer down, explaining that you don’t have any excess reserves to lend out? Why or why not? ...Do you think that removing the impediment to a nationwide banking system will be beneficial to the economy? Explain your answer.How has the too-big-to-fail policy been limited in the FDICIA legislation? How might limiting the too-big-to-fail policy help reduce the risk of a future banking crisis?
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