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9. A) the lender's relative lack of information around the borrower's potential returns and also risks that his investment activities. Adverse an option refers to case where…View the full answer
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Transcribed photo text: Adverse an option is a problem connected with equity and debt contract from a. The lender's relative absence of information around the borrower's potential returns and risks o invest activities. B. The lender's i can not qualify to legitimate require sufficient collateral to cover a 100 percent lose if the borrower defaults. C. The borrower's absence of inspiration to seek a loan for highly risky investments. D. Nobody of the above. When a exist40 inspect written ~ above the very first National bank of Flagstaff is deposited in one account at the Coconino ar Bank, climate a. The legal responsibility of the an initial National financial institution of Flagstaff rise by exist40 b. The reserves of the very first National financial institution of Flagstaff decrease by exist40. C. The liabilities of the Coconino County bank fall by exist40 d. The heritage of the Coconino County bank fall by exist40. Loan a. Are the largest category of financial institution assets. B. Carry out most that the bank's revenues. C. Earn the highest return of all financial institution assets. D. Execute each of the above. E. Do only (a) and (b) above. Banks hold primary reserves, an additional reserves, and also because lock all administer for liquidity and versus the high cost of a deposit outflow and bank failure. A. Store b. Securities c. Loans d. Bank capital e. None of the above Banks effort to screen good from poor credit risks to alleviate the incidence the loan defaults. To perform this banks a. Specialize in loan to details industries or regions. B. Compose restrictive covenants right into loan contracts. C. Expend resources to gain accurate credit backgrounds of your potential loan customers. D. Do all of the above. Every one of the following were factors for the federal Reserve plot of 1913 except a. The require for a Lender of critical Resort. B. The advent of the \"free banking principle.\" c. The rigidity and inelasticity that the money supply. D. An inefficient examine collection system. E. All were factors for the plot of 1913. Federal deposit insurance allowance was produced under a. The Constitution. B. The National money Act that 1863 &/or the national Banking act of 1864. C. The commonwealth Reserve plot of 1913 d. The Glass-Steagall (Banking) plot of 1933. E. Nobody of the above.