Which of the Following Is Not a Reason to Create

question 34

Multiple Choice

Which of the following is not a reason to create large financial holding companies?

• A) Financial holding companies offer a wide array of services under one brand name.
• B) Financial holding companies need only one CEO, one Board of Directors, and one accounting system regardless of size.
• C) Financial holding companies are well diversified so risk is reduced.
• D) Financial holding companies are exempt from having to pay for FDIC insurance on deposits.

---

Definitions:

Adverse Selection Death Spiral

A situation in insurance markets where rising premiums cause healthy people to drop coverage, leaving a pool of mainly high-risk insureds, leading to further rate increases and potentially the collapse of the market.

U.S. Government

The federal government of the United States, consisting of three branches: executive, legislative, and judicial, established by the Constitution.

Common Resource

A resource that is nonexcludable and rival in consumption.

Super Bowl

The annual championship game of the National Football League (NFL), watched by millions worldwide.