As DIs Made a Shift from an "Originate-To-Hold" Banking Model

question 178

Multiple Choice

As DIs made a shift from an "originate-to-hold" banking model to an "originate-to-distribute" model over the last decade,

• A)banks became more financially stable.
• B)it became easier to measure the riskiness of individual loans.
• C)there was a dramatic increase in systematic risk of the financial system.
• D)the Federal Reserve decreased the number of services that banks could provide.

Identify the concept of the capital allocation line (CAL) and its significance.

Understand the differences in risk tolerance among investors and its impact on portfolio selection.

Recognize the importance of the risk-free asset in portfolio construction and its role.

Understand and apply the concept of the reward-to-volatility ratio.

---

Definitions:

Cash Collected

The total amount of cash received by a company during a specific period.

Sales Collection

The process of receiving payment from customers for goods or services sold, improving cash flow and liquidity.

Operating Expenses

Regular expenses associated with the operation of a business, such as rent, utilities, and payroll, not directly tied to production.

Cost of Sales

The immediate expenses related to the manufacturing of products sold by a business, encompassing costs for materials and labor.