When a Depository Institution Pools Risk, It

question 556

Multiple Choice

When a depository institution pools risk, it

• A) buys short and lends long.
• B) borrows reserves from the Federal Reserve.
• C) spreads loan losses across many depositors so that no one depositor faces a high degree of risk.
• D) makes loans to just one firm.

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Definitions:

Abuses

Acts or situations that involve maltreatment or misuse, often resulting in harm or unfair treatment.

Outside Agents

External individuals or entities that influence or intervene in a system, situation, or organization, often bringing change or external perspectives.

Slippery Slope

A logical fallacy or argument that suggests taking a minor action will lead to major and increasingly negative consequences, without sufficient evidence for those outcomes.

Police Corruption

Unethical or criminal acts conducted by police officers, often for personal gain or to further the interests of the police force at the expense of public trust.