The FDIC Generally Prefers to Just Pay Off Depositors of a Failed

question 9

True/False

The FDIC generally prefers to just pay off depositors of a failed bank rather than have another bank purchase the failing institution.

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Definitions:

Contra Account

An account used in accounting to reduce the value of a related account; it has a balance opposite to the normal account balance.

Par Value

The face value of a bond or the stock value stated in the corporate charter, which may differ from its market value.

Carrying Value

The book value of an asset on a company's balance sheet, calculated as the original cost minus accumulated depreciation.

Loss On Redemption

The financial loss incurred when a debt instrument, such as a bond, is repaid before its maturity date.