Which of the Following Is NOT a Reason for Using

question 27

Multiple Choice

Which of the following is NOT a reason for using a bad bank as a vehicle to add value in the loan sale process?

• A)Contracts for managers can be created to maximize the incentives to generate enhanced values from loan sales.
• B)The bad bank enables bad assets to be managed by loan workout specialists.
• C)The bad bank does not need to be concerned about liquidity needs since it does not have any deposits.
• D)Moving the bad loans off the balance sheet of the good bank will improve the markets perception, and thus performance, of the good bank.
• E)The good bank-bad bank structure increases information asymmetries regarding the value of the good bank's assets.

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Definitions:

Public Scrutiny

The examination and critical observation of an individual, company, or process by the general public, often facilitated by media outlets.

Average Workers' Pay

The mean wage earned by employees in a specific job, industry, or region, calculated by dividing total wages by the number of workers.

Pay Structure

The organization of different levels of pay within a company or industry, usually based on factors like experience, education, and performance.

Market Rate

The average cost or compensation for a particular job or service in the broader market or industry.