If People Speculate That a Run on One Bank Will

question 48

Multiple Choice

If people speculate that a run on one bank will cause a run on all banks in the financial system, and this speculation proves accurate, then the financial system would experience what is known as a(n)

• A)commodity crisis.
• B)securitization meltdown.
• C)bank panic.
• D)institutional death spiral.
• E)a currency crisis.

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Definitions:

Amortization

The systematic reduction of the value of an intangible asset over its useful life to reflect its declining value or the allocation of the cost of an intangible asset over a period of time.

Intangible Capital Asset

Non-physical assets, such as patents, copyrights, trademarks, and goodwill, that have value due to the rights or advantages they bring to a business.

Consolidated Financial Statement

A comprehensive financial report that combines the financial results of a parent company and its subsidiaries, presenting it as a single economic entity.

Fair Value Increment

The increase in the fair value of an asset over its previous book value, often recognized in the course of business combinations or revaluations.