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:

Losses

The negative financial result from business activities when costs exceed revenues.

Market Message

A communication or signal sent through the movement in prices, volumes, or other market indicators that reflects the collective actions and sentiments of market participants.

Entrepreneurial Process

A sequence of steps starting from ideation to the creation and management of a new business venture.

Competitive Market Economy

An economic system where a large number of buyers and sellers interact, resulting in the efficient allocation of resources through competitive pricing.