When a Bank Suspects That a $1 Million Loan Might

question 89

Multiple Choice

When a bank suspects that a $1 million loan might prove to be bad debt that will have to be written off in the future the bank

• A)can set aside $1 million of its earnings in its loan loss reserves account.
• B)reduces its reported earnings by $1,even though it has not yet actually lost the $1 million.
• C)reduces its assets immediately by $1 million,even though it has not yet lost the $1 million.
• D)reduces its reserves by $1 million,so that they can use those funds later.

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Definitions:

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A state of complete immersion and focused motivation in an activity, often leading to high levels of enjoyment and fulfillment.

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A psychological state of being fully engrossed or deeply involved in something, to the point of being oblivious to surrounding distractions.

Motivated Behaviors

Actions driven by internal desires and goals, reflecting an individual's needs, aspirations, or objectives.

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An individual's perception of their capability to influence or produce effects in their life.