Systemic Risk Exists Because

question 42

Multiple Choice

Systemic risk exists because:

• A) a. there is no government regulation of financial markets.
• B) a. financial institutions invest in similar securities and therefore are similarly exposed to large declines in prices of those securities.
• C) a. financial institutions borrow using long-term debt securities but lend their funds for short-term periods.
• D) a. financial institutions invest heavily in Treasury securities and therefore are exposed to the possibility that the government will default on its debts.

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Definitions:

Umami

One of the five basic tastes, characterized by a savory or meaty flavor, and attributed to the presence of glutamates and nucleotides.

Primary Tastes

The fundamental groups of tastes recognized by human taste perception, including sweet, sour, salty, bitter, and umami.

Sweet

A taste sensation often caused by the presence of sugars, perceived as pleasant and liked by most humans.

Olfactory Receptors

Specialized nerve cells in the nose responsible for detecting odors.