Before the Deregulation of Banks and Other Financial Institutions in the 1980s

question 60

True/False

Before the deregulation of banks and other financial institutions in the 1980s, the Federal Reserve Board's Regulation Q regulated the interest rates on bank deposits and the interest rates charged on loans.

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Definitions:

Risk-Free Economic Profits

Refers to theoretical profits that an investor can make without taking any market risk, which in reality is very hard to achieve due to market efficiencies.

Short Selling

Short selling is an investment strategy where an investor borrows shares and sells them on the open market, planning to buy them back later at a lower price to profit from the difference.

Equally-Weighted Portfolio

An investment portfolio where each asset is allocated the same percentage of total investment capital.

Securities

Financial instruments that hold some type of monetary value, such as stocks, bonds, or options.