One Enduring Truth of Banking Is That

question 56

Multiple Choice

One enduring truth of banking is that

• A)for some reason,bankers always seem willing to lend huge amounts to borrowers with a limited potential to repay.
• B)credit ratings work,but only in the aggregate.
• C)when liquidity dries up,bankers are typically able to ride out the storm by buying up other investors debt at pennies on the dollar,holding it until the crisis is over,and then selling at a huge profit.
• D)none of the options

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Definitions:

Operating Expenses

Costs related to the day-to-day operations of a business, excluding the cost of goods sold, such as rent, utilities, and payroll.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly used to create the good.

Transfer Price

The cost at which divisions within the same organization trade goods and services with each other.

Operating Income

Earnings from a company’s primary business activities, excluding deductions of interest and taxes.