Which of the Following Occurred Following the Failure of the Bank

question 70

Multiple Choice

Which of the following occurred following the failure of the Bank of the United States in 1930?

• A) Interest rates on low-grade corporate bonds rose relative to high-rated corporate bonds.
• B) Other banks in New York City suffered liquidity problems.
• C) A bank panic ensued within days.
• D) The stock market crashed.

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Definitions:

Corporation

A legal entity separate from its owners, with rights to own assets, incur liabilities, hire employees, enter contracts, and provide protection for its shareholders.

Sole Proprietorship

A type of business ownership where a single individual owns, manages, and is responsible for all aspects of the business.

Limited Liability Corporation

An organizational form that integrates the single-level taxation characteristic of partnerships and sole proprietorships with the protective limited liability feature of corporations.

Debt Financing

Acquiring funds for business activities by borrowing money, typically through loans or by issuing bonds, that must be repaid with interest.