Recall the Application About How Policymakers Use Stress Tests to Protect

question 82

Multiple Choice

Recall the Application about how policymakers use stress tests to protect the financial system to answer the following question(s) .
-According to this Application, if a bank does not pass the test, the Fed can

• A) prevent the bank from paying out dividends to its shareholders.
• B) make the bank raise additional capital from the financial markets.
• C) force the bank to close.
• D) Both A and B are correct.

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Definitions:

ADR

stands for Alternative Dispute Resolution, which encompasses various methods of resolving disputes outside traditional judicial processes, such as arbitration and mediation.

Nonadversarial Process

A method of resolving disputes without engaging in a confrontational or litigious manner.

Early Neutral Case Evaluation

A form of alternative dispute resolution in which a neutral third party evaluates the strengths and weaknesses of the disputing parties’ positions. The evaluator’s opinion forms the basis for negotiating a settlement.

Nonbinding Arbitration

An arbitration process where the decision or award cannot be legally enforced, and the parties are free to pursue further legal actions.