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.

---

Definitions:

Exclude

To deliberately leave something or someone out of a group, list, or conversation.

Private Sector

The sector of the economy operated by private individuals and businesses aiming for profit, without direct governmental management.

Excluded

Not included, left out, or omitted from a group, list, or category.

Rivalry in Consumption

A situation where the consumption of a good or service by one individual reduces its availability for consumption by others.