Kindleberger-Minsky Model Questions and Answers

Questions (Add Below):

-Fill in the Blank: According to the Kindleberger-Minsky model, the five clockwise steps that are designed to explain the anatomy of a Bubble are: Displacement, _____, _______,______, and _____.  (Answer: Displacement, boom, euphoria, crisis, and revulsion.)

-Shorting is based on valuation alone (Answer: False)

- Monoline insurers largely failed during the financial crisis due to making subprime securitizations (A: True)

-Which of the following are ways one can express a short opinion? A) Short the stock B) Buy Puts C) sell calls D) all of the above E) none of the above (Answer: D)

-Fill in the Blank: ______ is death by time decay. (Answer: Theta)

-____ is the number of years after the fact that unemployment data can be changed. (A: 5)

- Please provide three examples of Alternative Investments (Possible Answers: Hedge funds, managed futures, private capital, real estate, and commodities)

-Generally, hedge funds seek to uncover and exploit market mispricings (A:T

What effect does the Federal Reserve's open market bond purchases have on interest rates? Lowers them

What does the Kindleberger-Minsky model show? The pattern of bubbles is constantly repeatable

In essence what is an Over-the-Counter transaction? A private agreement

Does the type of bond deal (school, public park, etc.) affect the pricing of a bond? No

Where does Jim Klingler see the greatest dispersion in returns? Managed Futures

What are the 4 reasons Investor Relations wants to maximize shareholder price? Executive Compensation, Helps finance acquisitions, Prevents a hostile takeover, and deters activists   

Question: What is unique about the shape of a distribution when looking at investing?

Answer: Alot of kurtosis. Tails are very fat. Bad outcomes can happen often.

Question: Are speculators interested in ever owning the underlying asset? Answer: No, they are only interested in placing bets on future prices

Question: Is a Capital Appreciation Bond or a Current Interest Bond considered riskier?

Answer: Capital Appreciation Bond

Quesiton: Lack of correlation with the market to help diversification is an advantage of alternative investments. True or False

Answer: True

What does the Fed's Dual Mandate aim to do