Risk Managers Were Keen to Use Unregulated Derivative Mortgage Products

question 17

Multiple Choice

Risk managers were keen to use unregulated derivative mortgage products to shift risk off their balance sheets.Which of the following describes the consequence of failing to regulate investment business activities in a free-market environment?

• A) Unscrupulous participants use the opportunities to act exploitatively.
• B) Market participants voluntarily enforce ethical business practices.
• C) Oversight by directors is a guarantee of scrupulous behaviour.
• D) Market participants will cautiously push markets to expand.

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Definitions:

Notice Of Dishonor

A formal notification indicating that a negotiable instrument, such as a check, has been refused payment.

Certified

Officially recognized or verified, often by a certification body, as meeting a specific standard or criteria.

Discharged From Liability

A condition where an individual or entity is legally released from an obligation or debt.

Paying The Holder

The act of disbursing funds or settling a financial obligation to the lawful possessor of a negotiable instrument.