Essay Question – Choose 4 and answer with a minimum of 250 words

Instructions: 1) You must answer ANY 4 of the 7 following choices 2) Responses must be a minimum of 250 words each 3) Responses will be worth 10 points each toward total midterm score 4) You will have 2 hours to complete this section of the exam • How have Financial Institutions evolved in recent years in terms of their organizational structure, regulatory environment, profitability, business models, etc. • What have been some key trends in financial market instruments in recent years (e.g. Credit Default Swaps, Equity markets, etc) and some of the key drivers of these trends • Cite some of the key regulatory developments in recent years, particularly those aimed at financial stability. Which of these do you feel may have the best chance of containing risks from financial institutions? • What can be learned from studying historical financial crises that may help regulators and risk managers anticipate or prevent future crisis. Have any trends emerged over time in terms of common causes of crisis? • Differences between Macroprudential and Microprudential oversight, which approach is more likely to prevent systemic risks and why? • The “CAMELS” financial analysis approach has been sued by regulators to assign ratings to commercial banks for many years. Given all of the changes to the banking sector in recent years, including new types of risk that have emerged such as Cyber Risk, Fraud/Compliance Risk, etc, do you feel this approach is still relevant today or could it be improved by either adding new categories or measures of risk? Provide rationale for your suggestions. • Debate the role that central banks such as the Federal Reserve have played and in your view should play in financial crises, considering issues such as morale hazard, impact on consumers from bailouts, the risk to markets if no bailouts take place, etc.