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:

Negotiable Document

A written instrument, such as a bill of exchange, promissory note, or check, that guarantees payment of a specific amount of money and is transferable among different parties.

Goods-in-bailment

Items that are temporarily delivered to someone (the bailee) for custody or storage, without transfer of ownership.

Deliver to Order

A stipulation in shipping where goods are delivered to a specific party as per the instructions of the shipping document or bill of lading.

Innocent Purchaser

A legal term for someone who buys property without knowledge of any existing claims, disputes, or flaws affecting the property's title.