Which of the Following Is a Disadvantage of Using Loan-Backed

question 73

Multiple Choice

Which of the following is a disadvantage of using loan-backed bonds for a bank?

• A)The cost of funding often rises
• B)There is greater default risk on the bonds
• C)Loans used as collateral for the bonds must be held until the bonds reach maturity
• D)Loan-backed bonds have shorter maturities than deposits
• E)All the options are disadvantages of loan-backed bonds

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