(Last Word) the Federal Reserve Policy of "Extend and Pretend

question 36

Multiple Choice

(Last Word) The Federal Reserve policy of "extend and pretend"

• A)meant that the Fed did not distinguish in its lender of last resort function between solvent and insolvent firms.
• B)was praised for preventing a financial meltdown in which many solvent and insolvent firms would have failed.
• C)is accurately described by all of the other answers.
• D)was criticized for increasing moral hazard in the financial system.

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Definitions:

Weighted-average

A calculation method that assigns different weights to data points, used to determine the average value of various items in a dataset that are not equally significant.

Earnings Per Share

Earnings Per Share (EPS) is a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, measuring its profitability.

Preferred Dividends

Dividends that are paid out to preferred shareholders at a fixed rate before any dividends are paid to common shareholders.

Paid-in Capital

The total amount of money that shareholders have directly invested in a company by purchasing shares during initial offerings or via the secondary market.