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:

Placenta

An organ that develops in the uterus during pregnancy, facilitating the exchange of nutrients, blood, and waste products between mother and fetus.

Fetus

The developmental stage of a human being in utero from the end of the eighth week after conception until birth.

Miscarriages

The spontaneous loss of a pregnancy before the fetus can survive outside the uterus, typically before 20 weeks of gestation.

Prenatal Development

The process of growth and development within the womb, from conception to birth, encompassing various stages of physical and physiological changes.