In the First Six Months of 2003,branches of Commerce Bank

question 174

Multiple Choice

In the first six months of 2003,branches of Commerce Bank in New York City were robbed 14 times.The New York City Police recommended steps the bank could take to deter robberies,including the installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take their advice.According to a deputy commissioner of police,"Commerce does very little of what we recommend.They've told our detectives they have no interest in ever putting in the barriers." It would seem that Commerce Bank would have a strong incentive to install "bandit barriers" to deter robberies.Why wouldn't they do it?

• A)The banks would rather delay installation of any theft deterring equipment in anticipation of new,lower-cost innovations in the security devices market.
• B)The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers."
• C)The banks are concerned that "bandit barriers" would send the wrong message to customers-that the bank is unsafe.
• D)The banks probably resent any interference from the police department.

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Definitions:

Risk Profile

A risk profile assesses the willingness and ability of an individual or entity to take risks, often used in financial planning to tailor investment strategies.

Futures Contract

A uniform agreement to engage in a purchase or sale at a future time, with the price established beforehand.

Foreign Exchange Exposure

The risk associated with changes in foreign exchange rates affecting the value of investments held in foreign currencies.

Derivatives

Financial instruments whose value is based on the value of another asset, such as futures, options, and swaps.