The Global Financial Crisis That Began in Mid-2007 Resulted in Part

question 19

Multiple Choice

The global financial crisis that began in mid-2007 resulted in part because of a failure to adequately measure what key variables?

• A)The ability of borrowers to repay loans and the repayment history of loans originated by individuals
• B)The ability of borrowers to repay loans and the willingness of the FDIC to cover bad bank loans
• C)The repayment history of loans originated by individuals and the willingness of the FDIC to cover bad bank loans
• D)The strength of the housing market and number of new loans being originated
• E)The number of new loans being originated and the commissions being paid to loan originators

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Definitions:

Unit Cost

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Declining-Balance Method

A method of calculating depreciation that results in larger depreciation charges in the early years of an asset's life and smaller charges later on.

Straight-Line Method

A depreciation technique where an equal amount of depreciation expense is recognized for an asset over each year of its useful life.

Units Produced

The total quantity of units manufactured during a specific period in a manufacturing or production process.