The Primary Difference Between the "Payoff" and the "Purchase and Assumption

question 88

Multiple Choice

The primary difference between the "payoff" and the "purchase and assumption" methods of handling failed banks is

• A)that the FDIC guarantees all deposits when it uses the "payoff" method.
• B)that the FDIC guarantees all deposits when it uses the "purchase and assumption" method.
• C)that the FDIC is more likely to use the "payoff" method when the bank is large and it fears that depositor losses may spur business bankruptcies and other bank failures.
• D)that the FDIC is more likely to use the purchase and assumption method for small institutions because it will be easier to find a purchaser for them compared to large institutions.

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Definitions:

Unintended Changes

Outcomes or effects that were not anticipated or planned for, often occurring as a result of an action or decision.

Cross-Cultural Research

A field of study that examines the influence of culture on human behavior and cognitive processes, often through comparative studies.

Stereotyping

The act of assigning a fixed set of characteristics to a group of people based on their race, gender, social class, etc., often leading to oversimplified and inaccurate perceptions.

Field Research

Descriptive or experimental research conducted in a natural setting outside the laboratory.