A Digital Default Option

question 67

Multiple Choice

A digital default option

• A)always pays the par value of a loan if exercised.
• B)has a payout that is capped at 80 percent of the par value of the loan.
• C)will cause the FI never to lose more than the premium paid to purchase the option.
• D)always pays the par value of a loan if exercised and will cause the FI never to lose more than the premium paid to purchase the option.

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Definitions:

Cognition

Mental activity involved in understanding, processing, and communicating information.

Retroactive Interference

The phenomenon where newly learned information interferes with the recall of information learned previously.

Older Learning

refers to the process of learning that occurs later in life, emphasizing the capability of the adult brain to acquire and retain new information and skills.

Semantic Memory

A type of long-term memory involving the storage of factual information, concepts, and meanings.