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Some argue that the actions of the Fed since 2008 have been a net-zero type of transaction.   In a few short sentences detail one argument that it is a net-zero type of transaction, and one counter-argument to this.

Proponents argue that HFT aids our markets by providing increased ____________________.                         What is one counter-argument to this claim?  If we desire to thwart HFT, what is one legislative move that we can do to get them out of the market (i.e. not just banning them outright).  Describe what this would do.

During financial panics, the Fed operates as a __________________________________________   From January 2008 to November 2008, name 4 specific things that the Fed did to satisfy such a goal and try to stabilize the banking sector/economy (i.e. think about the levers which the Fed has at their disposal to pull):

The major liability of the Federal Reserve by 2010 is 

The writer of a put option _______________. 

The Fed changes reserve requirements from 10% to 9%, thereby creating $900 million in excess reserves. The total change in deposits (with no drains) would be 

The higher the level of interest rates, the greater a bond’s price sensitivity to interest rate changes. 

The use of credit derivatives by banks was appealing to them for the following reasons:I. It was a way to remove and decrease their exposure to credit risk.II. It was an opaque, relatively unregulated market.III. The spreads that they earned were high (return on a CDS minus return on a T-Bill).IV. All of their net positions were balance sheet items (i.e. all transactions were on their balance sheet). 

Fed funds are short-term unsecured loans while repos are short-term secured loans. 

In theory, a decrease in reserve requirements will lead to an: