When the values of stocks and bonds fluctuate, they have an impact on the balance sheets of insurance companies. Why is that impact more likely to be a problem for life insurance companies than for property and casualty companies?
Answer to relevant QuestionsCompare and contrast the structures of bank holding companies, financial holding companies and universal banks.As an employee, would you prefer to participate in a defined-benefit pension plan or a defined-contribution pension plan? Explain your answer.When did the financial crisis of 2007-2009 peak and why? Plot weekly data for 2006–2010 for the one-week LIBOR rate (FRED code: USD1WKD156N) and the effective federal funds rate (FRED code: FF). Explain the pattern. Do you think that the central bank, as lender of last resort, should also supervise the financial industry? Why or why not? During the financial crisis of 2007-2009, the Federal Reserve used its emergency authority to lend to nonbank intermediaries. Explain how this extension of the lender of last resort function added to moral hazard.
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