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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:

The major asset on the Fed’s balance sheet by 2010 was (hint: think what were they buying up): 

The relationship between maturity and yield to maturity is called the __________________.