Pooling of Risk Occurs When Depository Institutions

question 76

Multiple Choice

Pooling of risk occurs when depository institutions

• A) make assets more liquid.
• B) lend to a variety of different borrowers.
• C) bring lenders together.
• D) specialize in loaning only to good borrowers.

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Definitions:

Bystander-Calculus Model

A psychological framework explaining why individuals decide to intervene or not in emergency situations, based on personal cost-benefit analyses.

Affect-Cost Model

A theoretical framework explaining how emotions influence decision-making, particularly the evaluation of costs and benefits in social interactions.

Social Blunders

Mistakes or awkward situations created in social contexts due to misunderstanding or inappropriate behavior.

Diffusion of Responsibility

A socio-psychological phenomenon where individuals are less likely to take action or feel a sense of personal responsibility in the presence of a large group.