Which of the Following Contributed to the S&L Crisis in the 1980s

question 3

Multiple Choice

Which of the following contributed to the S&L crisis in the 1980s?

• A) falling real interest rates around 1980
• B) restrictions on the types of deposits at S&Ls
• C) regulatory forbearance
• D) all of the above

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Definitions:

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a specified price before a certain date.

Employee Options

A form of employee benefit that gives employees the right to purchase company stock at a set price at a future date.

Debt Options

Financial instruments giving the holder the right, but not the obligation, to deal with debt under specified conditions.

Calls

Options contracts giving the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price within a specified time.