Which of the Following Is a Drawback of FDIC Insurance

question 91

Multiple Choice

Which of the following is a drawback of FDIC insurance?

• A)It leads to excess industry profits.
• B)It has failed to arrest the trend of bank failures.
• C)It leads to the problem of moral hazard.
• D)It undercuts private insurance companies.

Understand the relationship between financial management ratios and company operational performance including asset, debt, and profitability management.

Recognize the importance of maintaining adequate levels of liquidity and asset management for operational efficiency.

Evaluate the impact of financial ratios on company decision-making and performance assessment.

Understand the concept of liquidity and its measurement.

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Definitions:

Automated Warehouse

A facility where the movement of goods and storage operations are carried out by robotic systems and automated machinery, reducing the need for manual labor.

Computerized Order System

A digital platform used to manage and process orders for goods or services efficiently.

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Opportunity Cost of Capital

Opportunity Cost of Capital is the return that is forgone by investing in a project instead of in comparable financial securities or projects with a similar risk profile.