When Risk-Taking Is Not Actuarially Fairly Priced into Deposit Insurance

question 77

Multiple Choice

When risk-taking is not actuarially fairly priced into deposit insurance premiums

• A)depositors are required to pay the shortfall in funds collected.
• B)there is an increase in the incentives for owners of DIs to take additional risk.
• C)deposit insurance premiums are more costly than economically justified.
• D)depositors will be unprotected should the DI become insolvent and fail.
• E)the insurance provider is forced to find other sources of funds to continue coverage for the institution.

---

Definitions:

Memory

The faculty by which the mind stores and remembers information.

Sociology Professor

An academic expert in sociology, the study of society, social institutions, and social relationships.

Midterm

An examination or assessment occurring in the middle of an academic term or course.

Dialectical Reasoning

A process in which opposing facts or ideas are weighed and compared, with a view to determining the best solution or resolving differences.