Loan Sales Do Not Completely Protect the Lending FI from Credit

question 6

Multiple Choice

Loan sales do not completely protect the lending FI from credit risk exposure because

• A)defaults may reduce the ability of the lending bank to sell loans in the future.
• B)a loan sale contains an implicit quality guarantee by the lending FI.
• C)loans are always sold with recourse.
• D)regulators require the lending FI to make restitution for defaulted loans.

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Definitions:

Puberty

The period during which adolescents reach sexual maturity and become capable of reproduction, marked by physical changes including growth spurts and hormonal changes.

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Relating to the natural world and the impact of human activity on its condition.

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The process by which living organisms receive and process the materials necessary for growth, energy, and maintenance of bodily functions.

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Units of hereditary information composed of DNA. Genes help cells to reproduce themselves and manufacture the proteins that maintain life.