WEEK 7 ASSIGNMENT – HOMEWORK ACTIVITY – BANKING CONCEPTS 2
This homework activity checks your understanding of why large financial firms or universal banks were created, the motivation behind the 1988 Basel Accord, the criteria for a successful central bank, and the limits of the Federal Reserve in preventing a stock market crash. Briefly answer (in a list or short paragraph) the following questions:
Owners and managers have cited three reasons for the creation of large financial firms or universal banks. What are these reasons? Refer to Chapter 13, section “The Future of Banks,” pages 336–337.
What was the primary motivation behind the creation of the 1988 Basel Accord?
Today, there is a clear consensus about the best way to design a central bank. What are the criteria for a successful central bank?
Respond to the following statement with a brief explanation: “The Federal Reserve can improve the performance of the stock market, but it cannot prevent a stock market crash.”
