Which of the Following Is NOT a Reason That Firms

question 96

Multiple Choice

Which of the following is NOT a reason that firms in the shadow banking system were more vulnerable than commercial banks during the financial crisis of 2007-2009?

• A) They could invest in riskier assets.
• B) Investors had no insurance against loss of principal.
• C) They made investments that would lose value if housing prices decline.
• D) They were more heavily regulated than commercial banks, making them less able to adjust to changing market conditions.

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Definitions:

Dollar Price

The cost of a product or service expressed in terms of the amount of currency needed to purchase it.

Equilibrium Dollar Price

Refers to the price level at which the supply of dollars in the foreign exchange market is equal to the demand for dollars.

Flexible Exchange Rates

A foreign exchange system where the value of currencies is determined by market forces without direct government intervention.

Libras

A constellation in the zodiac, symbolized by the scales, or in a financial context, might be mistaken for "libra," which refers to a unit of weight or a former currency.