Loan Sales Do Not Completely Protect the Lending FI from Credit

question 67

Multiple Choice

Loan sales do not completely protect the lending FI from credit risk exposure because

• A)defaults may reduce the ability of the lending bank to sell loans in the future.
• B)a loan sale contains an implicit quality guarantee by the lending FI.
• C)loans are always sold with recourse.
• D)regulators require the lending FI to make restitution for defaulted loans.
• E)loan sales force the FI to mark its remaining loans to market prices.

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Definitions:

Practice Play

Engaging in activities or exercises repetitively with the aim of improving skills or proficiency in a certain area.

Jumping Rope

Jumping rope involves swinging a rope so it passes under the feet and over the head of the person jumping, serving both as a form of play and exercise.

Hours

Units of time consisting of 60 minutes, used to measure the duration of events or the length of the day.

Constructive Play

A form of play involving the creation or construction of something, typically seen as beneficial for cognitive development.