Loan Sales Do Not Completely Protect the Lending FI from Credit

question 67

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.
• E)loan sales force the FI to mark its remaining loans to market prices.

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Definitions:

Social Zones

The different areas or contexts within society where various types of social interactions take place.

Spontaneous Interactions

Unplanned and unstructured exchanges among individuals, which can foster creativity, build relationships, and enhance group dynamics.

Productivity

The measure of efficiency in which inputs are converted into useful outputs, commonly used in economics and business to gauge performance.

Intragroup Tension

Refers to the stress or conflict that arises within a group due to differences in opinions, goals, or personalities among its members.