Besides Reducing Credit Risks, an FI Has an Incentive to Sell

question 42

Multiple Choice

Besides reducing credit risks, an FI has an incentive to sell loans it originates for all of the following reasons EXCEPT to:

• A)geographically diversify.
• B)decrease core deposits.
• C)lower reserve requirements.
• D)lower capital requirements.
• E)generate reinvestment income.

---

Definitions:

Preferred Stock

A category of corporate ownership that holds a superior right over the company's assets and profits compared to common stock.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date.

Preferred Stocks

Shares of a company that provide dividends to their holders before common stock dividends are issued and typically do not come with voting rights.

Cumulative

Cumulative refers to the total amount accumulated over a period of time, adding up all parts or elements.