Regulators Attempt to Reduce the Riskiness of Banks' Asset Portfolios

question 50

Multiple Choice

Regulators attempt to reduce the riskiness of banks' asset portfolios by

• A)limiting the amount of loans in particular categories or to individual borrowers.
• B)encouraging banks to hold risky assets such as common stocks.
• C)establishing a minimum interest rate floor that banks can earn on certain assets.
• D)requiring collateral for all loans.

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Definitions:

Fidelity Bond

A form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals, typically employees.

Corporate Funds

Money or financial resources that belong to a corporation and are used for its business operations and activities.

Dishonesty

Conduct that shows a lack of integrity or honesty in actions, often leading to deception or fraud.

Subrogated

The process by which an insurance company, having paid out a claim, acquires the legal right to pursue recovery from third parties responsible for the damage.