The Development of "Collateralized Debt Obligations", by Drexel Burnham Lambert

question 18

Multiple Choice

The development of "collateralized debt obligations", by Drexel Burnham Lambert, shows that:

• A)Well-paid bankers always come up with good ideas
• B)The financial system can be very fragile
• C)Financial products are easily copied so first movers must quickly establish a large track record of successful trades
• D)A financial crisis was inevitable

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Definitions:

Liability

A financial obligation or debt that an entity is required to pay to another entity.

Change In Accounting Principle

An adjustment in the way a company recognizes, measures, presents, or discloses financial information due to a change in accounting policy.

Continuing Operations

The parts of a business expected to continue operating in the foreseeable future, as opposed to segments being discontinued or sold.

Newly Adopted Principle

A recently implemented accounting guideline that a company starts following, which can affect its financial reporting.