A Bank Allows Us to Diversify Risk Because

question 148

Multiple Choice

A bank allows us to diversify risk because:

• A)it has a big pool of borrowers and savers,so the risk of repayment is spread among many.
• B)it has a small amount of borrowers,but many savers,so it can combine savings to make larger loans.
• C)it has a small amount of borrowers and savers,so it can connect the optimal saver to the best-matched borrower.
• D)it has a big pool of borrowers,but not many savers,so it can choose the riskiest person to borrow from.

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Definitions:

Dopamine

A neurotransmitter associated with pleasure, movement, and attention in the brain.

Amphetamine

A potent central nervous system stimulant used in the treatment of attention deficit hyperactivity disorder (ADHD) and narcolepsy, and sometimes as a recreational drug.

Dopamine Hypothesis

A theory suggesting that the imbalance of dopamine levels in the brain plays a critical role in the development of schizophrenia and other psychotic disorders.

Young Adulthood

A stage of human development that typically involves individuals in their late teens through their twenties, focusing on exploring personal and professional relationships and identity.