A Small Local Bank Failed Because a Housing Market Collapse

question 63

Multiple Choice

A small local bank failed because a housing market collapse following the departure of the area's largest employer.What type of risk applies to the failure of the institution?

• A)Firm-specific risk.
• B)Technological risk.
• C)Operational risk.
• D)Sovereign risk.
• E)Insolvency risk.

---

Definitions:

Units-of-production

A method of depreciation that assigns an asset's cost based on its usage, activities, or output, instead of the passage of time.

Depreciation Expense

Depreciation Expense denotes the allocation of an asset's cost over its useful life, reflecting the asset's consumption or decline in value.

Straight-line

A method of depreciation that allocates an equal expense amount to each period over the useful life of an asset.

Straight-line Depreciation

A method of allocating the cost of a tangible asset over its useful life, evenly distributing the depreciation expense each year.