Shareholders in a Bank May Encourage Excessive Risk Taking by the Bank

question 8

Multiple Choice

Shareholders in a bank may encourage excessive risk taking by the bank because

• A) shareholders are generally risk neutral
• B) shareholders are generally risk averse
• C) shareholders are generally risk loving
• D) limited liability means that shareholder losses are limited
• E) limited liability means that shareholder gains are limited

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Definitions:

Infant Mortality

The rate at which babies under one year of age die, often used as an indicator of the health and well-being of a population.

Maternal Mortality

The death of a woman during pregnancy, childbirth, or within 42 days of termination of pregnancy, from causes related to or aggravated by the pregnancy or its management.

Social Status

The position or rank of a person or group within the society based on wealth, occupation, education, or other criteria.

Diarrheal Diseases

A group of illnesses characterized by frequent, loose, or watery stools, often a result of infections by bacteria, viruses, or parasites.