Of the Following Methods That Banks Might Use to Reduce

question 85

Multiple Choice

Of the following methods that banks might use to reduce moral hazard problems,the one not legally permitted in the United States is the

• A)requirement that firms keep compensating balances at the banks from which they obtain their loans.
• B)requirement that firms place on their board of directors an officer from the bank.
• C)inclusion of restrictive covenants in loan contracts.
• D)requirement that individuals provide detailed credit histories to bank loan officers.

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Definitions:

Kenya

A country in East Africa known for its breathtaking landscapes, wildlife reserves, and diverse cultural heritage.

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Decolonization refers to the process by which colonies become independent from colonial powers, often through political, social, and cultural change.

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A global conflict that lasted from 1939 to 1945, involving most of the world's nations and marked by significant events like the Holocaust and the use of atomic bombs.

India

A South Asian country known for its diverse cultures, languages, religions, and historical significance, as well as being the world's largest democracy.