Which of the Following Is One Unintended Consequence of the Federal

question 103

Multiple Choice

Which of the following is one unintended consequence of the federal bailouts in response to the 2008 financial crisis?

• A)Bondholders will charge equity holders for the risk of this abuse.
• B)Equity holders will credibly commit not to take excessive risk by agreeing to very strong bond covenants.
• C)Lenders to corporations considered "too big to fail" may presume they have an implicit government guarantee,thus lowering their incentives to insist on strong covenants.
• D)Managers who earned large bonuses when their businesses did well did not need to repay those bonuses later when things turned sour.

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Definitions:

Estrogens

Sex hormones secreted by ovaries; function in reproduction and cause development of female secondary sexual characteristics.

Corpus Luteum

A temporary endocrine structure in female ovaries that is involved in the production of relatively high levels of progesterone, moderate levels of estradiol, inhibin A, and small amounts of estrogen.

Testes

Male reproductive organs that produce sperm and hormones, such as testosterone.

Primary Oocyte

An immature egg cell that undergoes meiosis to form a haploid ovum, a critical cell type in female reproduction.