Many Lessons Should Be Learned from the Credit Crunch

question 63

Multiple Choice

Many lessons should be learned from the credit crunch.

• A)One lesson is that credit rating agencies need to refine their models for evaluating esoteric credit risk created in MBS and CDOs.
• B)One lesson is that borrowers must be more wary of putting complete faith in credit ratings.
• C)One lesson is that bankers seem not to scrutinize credit risk as closely when they serve only as mortgage originators and then pass it on to MBS investors rather than hold the paper themselves.
• D)All of the above

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Definitions:

Inefficient Processes

Processes that utilize more resources or time than necessary, leading to reduced productivity or increased costs.

M-Form

The Multidivisional Structure, a form of organizational structure where a corporation is divided into several semi-autonomous divisions, each with its own management.

Customer Demand

The amount of a product or service that buyers are prepared and can afford to buy at a certain price.

Coordination

The method of coordinating individuals or teams to ensure they collaborate effectively and efficiently.