Lectures_4_5 @eng

Over time, FDI flows are more persistent in AEs rather than in EMEs

• mostly true

• mostly false

The "global financial cycle" can easily explain the recent ...

• divergence in policy uncertainty

• convergence in financial risk

• divergence in financial uncertainty

• divergence in leverage ratios

Sentiment swings can explain temporary market ...

• divergence

• mispricing

Leverage is capped by regulators for ...

• HFs

• Sovereing Wealth Funds

• Banks

• all of them

Investment banks usually increase their leverage (Assets/Equity) ...

• by raising debt faster than assets

• by raising equity faster than assets

Financial markets would typically .... effects of uncertainty on the economy

• amplify the asymmetric

• attenuate the symmetric

HFs managers usually keep ...

• low betas against the market

• low leverages

• constant AUMs

• strategies constant throughout volatile markets

Diversification .... the cross-sectional correlation between individual portfolios, leading to ..... systemic risk

• raises & higher

• decreases & higher

• raises & lower

The pro-cyclical behaviour of financial intermediaries implies that ....

• banks expand loans when stock markets raise

• banks expand loans when credit risk is raising

• stock markets drop when credit risk drops