Finance Study Quiz

Quiz 1 1. The raw fundamental data on the human genome cannot be patented but the genes and gene-based discoveries can. 2. The map of the human genome produced by Collins and his co-workers is available from the internet for free all over the world. In other words, the map of the human genome created by the HGP is a public good. 3. Celera genomics has no patent over the human genome. However, celera does have proprietary rights over its version of that genome. It is private good.
Quiz 2 1. Any new idea applicable to the essential function of finance is termed a financial innovation. This is the loosest possible definition of financial innovation.
Credit card automatic teller machines venture capital firms. 2. The distinguishing feature of ‘modern banking’ emerges from the financial innovation known as ‘securitization,’ namely: banks pool assets (from mortgages to car loans) and sell the repackaged assets. Securitized debt’ is one of the financial innovations at the heart of the financial crisis 2007-08, and refers to the creation of bonds of different seniority (known as ‘tranches’) that are fixed-income claims backed by collateral in the form of large portfolios of loans (mortgages, car loans, credit cards, etc.). 3. The CDSs are insurance contracts. The main function of the CDSs is to hedge against default.
More specifically, the buyer of the CDS makes payments to the seller in order to receive protection. The buyer receives a payment if a credit instrument (for example, a loan or a bond) goes into default or in the case of a specified credit event such as bankruptcy. In particular, CDSs allow people to insure against the failure of new-fangled financial products.
Quiz 3 1. Real A financial innovation that provides economically valuable benefits constitutes a real financial innovation. Concrete examples of real financial innovations are the Credit Card and the ATM.
Nominal Nominal financial innovations are