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:

Antagonistic Pleiotropy

A genetic trait that confers a benefit to an organism in one context but may be detrimental in another.

Mutations

Changes in the nucleotide sequence of an organism’s DNA, leading to genetic diversity and can cause new genes and alleles to arise.

Fitness

The genetic contribution of an individual to the next generation's gene pool, often measured by the individual's reproductive success.

Pseudomonas Aeruginosa

A type of bacteria commonly found in the environment that can cause infections in the body, especially in individuals with weakened immune systems.