The Root Cause of Much of the Losses of FIs

question 34

Multiple Choice

The root cause of much of the losses of FIs during the financial crisis of 2008-2009 was

• A)interest rate risk.
• B)market risk.
• C)sovereign risk.
• D)firm-specific risk.
• E)systematic risk.

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Definitions:

High-Technology Stocks

These are shares in companies involved in high-tech industries, known for rapid innovation and growth potential but also higher risk.

Long-Term Government Bonds

Debt securities issued by a government with a maturity of typically more than ten years, used to fund public expenditures.

Expected Return

The anticipated gain or loss from an investment over a period, considering both the probability of outcomes and the impact of different outcomes.

Portfolio

A collection of financial investments, such as stocks, bonds, commodities, or real estate, held by an individual or institution.