The Contagion Effect

question 13

Multiple Choice

The contagion effect

• A)stems from the positive correlation in FI returns.
• B)results when interest rate risk increases credit risk and liquidity risk exposures.
• C)occurs when liquidity risk problems at bad banks damages well-run banks.
• D)occurs when a computer virus infects the computerized electronics payments systems.
• E)is completely eliminated by government provided deposit insurance against bank runs.

---

Definitions:

Intrapreneur

An employee within a company who promotes innovative product development and marketing by leveraging entrepreneurial skills.

Research and Development

A business or government activity that involves the investment of resources in innovation and improvement of products, services, or processes.

Effective Communication

Communication whereby the right people receive the right information in a timely manner.

Innovation

The process of introducing new ideas, methods, or products to improve efficiency, effectiveness, or competitive advantage.