Risk Managers Were Keen to Use Unregulated, Derivative Mortgage Products

question 16

Multiple Choice

Risk managers were keen to use unregulated, derivative mortgage products to shift risk off their balance sheets. What is 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:

Hypothalamus

A region of the brain that plays a crucial role in many essential functions, including hormone release, regulation of body temperature, and hunger control.

Appetite

The natural desire to satisfy a bodily need, especially for food.

Hormone

A chemical substance produced in the body that controls and regulates the activity of certain cells or organs.

Psychological Theories

Frameworks or models that are used to understand, predict, and sometimes control behavior and mental processes.