Pooling Risk

question 22

Multiple Choice

Pooling risk

• A)refers to a default contract made by a bank to other banks.
• B)refers to spreading the risk of loan default among all the depositors within the depository institution.
• C)is now illegal under the Nuisance Act of 2007.
• D)occurs when one person lends to an entire group or pool of borrowers.
• E)refers to the lower cost of obtaining funds from a depository institution.

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Definitions:

Ultimate Attribution Error

A cognitive bias where individuals attribute negative actions of out-group members to their inherent characteristics while attributing positive actions to situational factors.

Outgroup Derogation

The phenomenon of negatively evaluating or discriminating against members of an outgroup compared to one's ingroup.

Ingroup Bias

The tendency for people to give preferential treatment and positive attitudes towards members of their own group over those from other groups.

Social Situation

A scenario involving interactions between individuals or groups within a social context, influencing behaviors, thoughts, and emotions.