A Digital Default Option

question 58

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)Answers A and C only.
• E)Answers A and B only.

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Definitions:

Functional Conflict

Conflict that is constructive and encourages diversity of thought, leading to improved decision-making and innovative solutions within an organization.

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Acts Aggressively

Behaviors exhibited by individuals or groups that intend to harm or intimidate others.

Dysfunctional Conflict

A type of conflict that hinders organizational performance, threatens its interests, and is characterized by tension and hostility.