Which of the Following Is Not a Factor That May

question 41

Multiple Choice

Which of the following is not a factor that may tend to increase loan sales in the future?

• A) There is an increased trend to apply credit ratings to loans offered for sale, increasing the attractiveness to secondary market purchasers.
• B) Because of their special credit monitoring skills, FIs have a comparative advantage in making loans to below-investment grade companies and then selling the loan.
• C) The trend toward marked-to-market accounting for assets makes bank loans more like securities so they may be easier to sell.
• D) The risk-based capital requirements of the Bank for International Settlements give banks a strong incentive to sell housing loans to decrease their amount of risky assets.

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Definitions:

Earth Flow

A type of mass wasting event that occurs when water-saturated soil or fine-grained sediment flows downhill, resembling a very slow moving river of soil.

Debris Avalanche

A rapid flow of rock, soil, and other debris down a slope, often triggered by natural events such as earthquakes or volcanic eruptions.

Rock Slide

A type of landslide involving the rapid sliding of rock mass down a slope, often triggered by rainfall, earthquakes, or volcanic activity.

Debris Flow

A moving mass of loose mud, sand, soil, rock, and water that travels down slopes and valleys, often caused by heavy rainfall or rapid melting of snow and ice.