AIG Lost Money Because

question 15

Multiple Choice

AIG lost money because

• A) It bought tranches created from mortgages
• B) It invested heavily in real estate
• C) It invested heavily in the stock market
• D) It insured AAA tranches of ABS CDOs

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Definitions:

Total Expenses

The sum of all costs and expenses incurred by a business during a specific period, including operating and non-operating expenses.

Budgeting

The process of creating a plan to spend your money, allocating estimated income towards expense categories.

Activity Variance

The difference between the budgeted or planned level of activity or production and the actual level achieved.

Direct Labor

The labor costs directly attributed to the production of goods or services, such as wages paid to assembly line workers.