Which of the Following Is an Example of How Incentive

question 170

Multiple Choice

Which of the following is an example of how incentive structures contributed to the collapse of investment banks?

• A) The bonus structures of most executives were tied to short-term profitability.
• B) The rating agencies acted independently in assigning ratings to mortgage-backed securities and had no incentive to understate the risks.
• C) Mortgage-backed securities were closely scrutinized in order to minimize risk and obtain higher ratings.
• D) Despite SEC regulations, investment banks kept leverage ratios low in order to increase profits.

Recognize the significance of the uniform law process and how it aims to create consistency across states.

Understand the role and significance of the U.S. Constitution as the supreme law of the land.

Comprehend the impact of cyberlaw and its foundation in pre-existing laws.

Grasp the processes involved in treaties and their significance in international law.

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Definitions:

Higher Standard

A set of criteria or principles that is more rigorous or demanding than the usual or basic standard, often used in legal and ethical contexts to denote superior quality or integrity.

Common Carriers

Companies that offer transportation services to the public under the authority of a regulatory body and are required to provide service without discrimination.

Common Law

Common Law is a legal system based on judicial decisions and precedent, as opposed to statutes or written laws enacted by a legislative body.

Warehouse Operator

An entity or individual responsible for managing the storage, handling, and distribution of goods in a warehouse.