What Was the Rationale for the Fed Lending Billions of Dollars

question 83

Multiple Choice

What was the rationale for the Fed lending billions of dollars to the insurance company American International Group (AIG) ?

• A) The Fed knew it would receive a high return on the loan.
• B) The Fed was following a long-time precedent in rescuing top insurance companies.
• C) If AIG collapsed,the insurance industry would as well.
• D) The money AIG owed to banks posed a systemic risk.

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Definitions:

Accounts Receivable

Funds that clients or customers owe to a company for products or services already provided but have yet to be paid for.

Partnership Agreement

A legal document that specifies the rights, responsibilities, and distribution of profits and losses among partners in a business partnership.

Salary Allowances

Salary allowances refer to the specific amounts granted to employees over their basic salary for various purposes, such as housing, transportation, or medical expenses.

Income Statements

A financial statement that shows a company's revenues and expenses over a specific period, leading to net profit or loss.