Because of Asymmetric Information,the Failure of One Bank Can Lead

question 78

Multiple Choice

Because of asymmetric information,the failure of one bank can lead to runs on other banks. This is the

• A)too-big-to-fail effect.
• B)moral hazard problem.
• C)adverse selection problem.
• D)contagion effect.

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Definitions:

Comparative Balance Sheet

A financial statement that presents a company's financial position at different points in time side-by-side to assess changes in assets, liabilities, and equity.

Cash Dividend

A cash dividend is a payment made by a company to its shareholders, typically from its profits, in the form of cash or electronic funds transfer.

Financing Activities

Transactions and events involving changes in equity and debt in the financial structure of a company, such as issuing shares or taking loans.

Comparative Balance Sheet

A financial statement that presents the assets, liabilities, and shareholders’ equity of a company at two or more different points in time, used to analyze trends in financial position.