Banks Make Use of the Federal Funds Market in Part

question 37

Multiple Choice

Banks make use of the federal funds market in part to

• A)pay their tax liabilities.
• B)manage liquidity risk.
• C)deal with moral hazard.
• D)deal with adverse selection.

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Definitions:

Bankruptcy Code

The set of laws that governs the process of bankruptcy in the United States, which allows individuals and businesses to discharge their debts or reorganize their financial obligations.

Automatic Stay

A legal provision that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

Secured Creditors

Creditors who have a legal right to specific assets of a debtor as collateral for the debts owed to them.

Repossession Proceedings

The legal process by which a lender takes back property when the borrower defaults on payments.