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

question 46

Multiple Choice

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

• A) that the CDIC guarantees all deposits when it uses the "payoff" method
• B) that the CDIC guarantees all deposits when it uses the "purchase and assumption" method
• C) that the CDIC 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 CDIC 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:

What-Is-Beautiful-Is-Good Stereotype

The assumption that physically attractive individuals possess more desirable personality traits and are more successful than those who are less attractive.

Assertive

Characterized by confident and direct behavior or communication, ensuring one's rights or needs are recognized without being aggressive.

Attractiveness

A property or quality of someone that evokes interest, liking, or desire based on physical appearance, personality, or other traits.

Person Perception

The process by which individuals form impressions and make judgments about the characteristics and motives of others.