Which of the Following Is Not True? Choose One)

question 1

Multiple Choice

Which of the following is not true? choose one)

• A) The bonus structure at banks is liable to lead to short term horizons for decision making.
• B) A portfolio of BBB tranches created from mortgages has a loss probability distribution similar to a portfolio of BBB bonds.
• C) The term 'agency costs' describes the situation where the incentives of two parties in a business relationship are not perfectly aligned.
• D) Correlations tend to increase in stressed market conditions.

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Definitions:

Activity-based Costing

Activity-based costing is a more precise method of product costing that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.

Idle Capacity

The portion of a company's resources or production capability that is not currently being utilized to its full potential.

Activity-based Costing

Activity-based costing allocates overhead costs based on the specific activities that contribute to overhead in producing a product or service.

Processing Batches

Groups of items or units processed together in one operation to improve efficiency, often in manufacturing or data processing contexts.