AIG Lost Money Because

question 15

Multiple Choice

AIG lost money because

• A) It bought tranches created from mortgages
• B) It invested heavily in real estate
• C) It invested heavily in the stock market
• D) It insured AAA tranches of ABS CDOs

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the most recently produced items are recorded as sold first.

Falling Prices

A situation where the general level of prices for goods and services decreases over time.

LIFO Method

An inventory valuation method that assumes the last items added to inventory are the first ones to be sold (Last In, First Out).

Periodic Inventory System

An inventory valuation method where the ending inventory and cost of goods sold are determined at the end of the accounting period.