Beginning in September 2008 and Extending into the Spring of 2009,the

question 2

Multiple Choice

Beginning in September 2008 and extending into the spring of 2009,the world's credit markets- lending of all kinds- nearly stopped.The corporate lending markets demonstrated which of the following complex combination of crisis conditions?

• A)The risky investment banking activities undertaken post-deregulation, especially in the mortgage market, overwhelmed the banks' commercial banking activities.
• B)The indebtedness of the corporate sector was tiered, with the biggest firms actually being extremely well positioned to withstand the crisis. The middle and lower tier companies by size, however, were heavily dependent on debt, particularly short-term debt for working capital financing. Many were now having trouble in both servicing existing debt and gaining access to new debt to stave off declining business conditions.
• C)All corporate borrowers were suddenly confronted by banks reducing their access to credit.
• D)All of the above are true.

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Definitions:

Financial Compensation

Payment or reward given to employees or workers for their services, which could include salaries, wages, bonuses, and benefits.

Credit Card Companies

Financial institutions that issue credit cards and manage accounts, facilitating electronic payments and extending credit to consumers.

Minimum Payment

The smallest amount of money that one must pay on a debt for a particular period, often used in the context of credit card debts.

Financial Distress

A situation where an individual or company cannot meet or has difficulty paying off its financial obligations to creditors.