Pooling Risk

question 3

Multiple Choice

Pooling risk

• A)refers to a default contract made by a bank to other banks.
• B)refers to spreading the risk of loan default among all the depositors within the depository institution.
• C)is now illegal under the Nuisance Act of 2014.
• D)occurs when one person lends to an entire group or pool of borrowers.
• E)refers to the lower cost of obtaining funds from a depository institution.

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Definitions:

Renegotiate

The process of revising the terms of an existing agreement, typically to adjust for new circumstances or to gain more favorable terms.

Scheduled Payments

Payments set to be made at specific times, typically as part of a repayment plan for a loan.

Equivalent

Items or values that are equal in function, value, or meaning.

Loan

A loan amount that requires repayment along with interest accrued.