Worksheets2008 Financial Crisis Quiz
Total questions: 20
Worksheet time: 10mins
Name
Class
Date
1.
What is the primary function of a mortgage?
a)
To provide financing for purchasing real estate.
b)
To offer investment advice for property owners.
c)
To provide insurance for real estate transactions.
d)
To facilitate rental agreements between landlords and tenants.
2.
What does the abbreviation APR stand for?
a)
Adjusted Payment Rate
b)
Annual Percentage Rate
c)
Average Percentage Rate
d)
Annual Payment Rate
3.
What is the difference between APR and Interest?
a)
APR is always lower than interest rates.
b)
Interest includes fees and penalties, while APR does not.
c)
APR is a type of interest rate that only applies to mortgages.
d)
APR includes interest and fees, while interest is just the cost of borrowing.
4.
What is the main benefit of a fixed rate mortgage?
a)
Stability in monthly payments.
b)
Potential for lower overall loan costs.
c)
Flexibility to change payment amounts each month.
d)
Lower interest rates than variable mortgages.
5.
What is the main drawback of a variable rate mortgage?
a)
The main drawback is the fixed interest rate.
b)
The main drawback is the lack of flexibility in payments.
c)
The main drawback is the requirement for a large down payment.
d)
The main drawback is the uncertainty of fluctuating interest rates.
6.
What happens to the cost of a variable rate mortgage when the interest rate increases?
a)
The cost of a mortgage is unaffected by interest rate fluctuations.
b)
The cost of a mortgage remains the same regardless of interest rate changes.
c)
The cost of a mortgage increases when the interest rate rises.
d)
The cost of a mortgage decreases when the interest rate rises.
7.
As a homeowner, what does 'equity' mean?
a)
Equity refers to the total amount of mortgage debt owed on the property.
b)
Equity is the amount of money a homeowner pays in property taxes each year.
c)
Equity is the homeowner's ownership interest in the property, calculated as the home's market value minus any outstanding mortgage debt.
d)
Equity is the difference between the purchase price and the selling price of a home.
8.
Which of these can negatively affect your credit rating?
a)
Late payments, high credit utilization, bankruptcy, and too many hard inquiries.
b)
Paying bills on time
c)
Having a diverse credit mix
d)
Low credit utilization
9.
Why would a lender class someone as a credit risk?
a)
A lender classifies someone as a credit risk due to poor credit history or high debt levels.
b)
A lender classifies someone as a credit risk based on their age.
c)
A lender classifies someone as a credit risk if they have no credit history.
d)
A lender classifies someone as a credit risk due to a high income.
10.
What is a subprime mortgage?
a)
A subprime mortgage is a government-backed loan for first-time homebuyers.
b)
A subprime mortgage is a loan for borrowers with low credit scores, often featuring higher interest rates.
c)
A subprime mortgage is a loan for borrowers with excellent credit scores.
d)
A subprime mortgage is a type of savings account.
11.
Which of these scenarios would demonstrate a lack of morality?
a)
Helping a friend in need.
b)
Volunteering for a charity.
c)
Sharing knowledge with others.
d)
Deceiving someone for personal gain.
12.
Which of these is a benefit of investment bonds?
a)
Stable income and lower risk compared to stocks.
b)
High potential for rapid growth like stocks.
c)
Tax-free income for all investors.
d)
Guaranteed returns regardless of market conditions.
13.
Why were the bonds being sold prior to the 2008 Financial Crash problematic?
a)
The bonds were backed by high-risk subprime mortgages, leading to defaults and significant financial losses.
b)
The bonds were primarily composed of blue-chip corporate stocks.
c)
The bonds were sold at a premium, indicating high demand and low risk.
d)
The bonds were backed by government securities, ensuring their safety.
14.
What does an investment banker do?
a)
An investment banker focuses on retail sales of financial products.
b)
An investment banker raises capital for clients, advises on mergers and acquisitions, and assists in financial restructuring.
c)
An investment banker only provides tax advice to clients.
d)
An investment banker primarily manages personal savings accounts.
15.
How much money did Nick Leeson steal from Barings Bank?
a)
£500 million
b)
£1 billion
c)
£300 million
d)
£827 million
16.
How did Nick Leeson steal money from Barings Bank?
a)
Nick Leeson embezzled funds through insider trading.
b)
Nick Leeson manipulated stock prices through legal trading practices.
c)
Nick Leeson stole money by hiding losses through unauthorized trading and fictitious accounts.
d)
Nick Leeson stole money by hacking the bank's computer system.
17.
How did Northern Rock bank contribute to the 2008 Financial Crisis?
a)
Northern Rock's high interest rates attracted too many depositors.
b)
The bank's investment in foreign markets caused its downfall.
c)
Northern Rock was the first bank to offer online banking services.
d)
Northern Rock's reliance on short-term funding and subsequent liquidity crisis contributed to the 2008 Financial Crisis.
18.
What did the Lehman Brothers do wrong?
a)
Lehman Brothers focused solely on government bonds.
b)
Lehman Brothers had a conservative investment strategy.
c)
Lehman Brothers avoided investing in real estate altogether.
d)
Lehman Brothers took on excessive risk and failed to manage their exposure to mortgage-backed securities.
19.
Which of these is an example of "short trading"?
a)
Buying shares of a stock expecting the price to rise.
b)
Holding onto shares until they appreciate in value.
c)
Investing in a mutual fund for long-term growth.
d)
Selling borrowed shares of a stock with the expectation that the price will drop.
20.
How much in public funds was used to bail out the UK banks after the 2008 Financial Crisis?
a)
£500 billion
b)
£100 million
c)
£1 trillion
d)
£200 billion
100 %
