Off-Balance-Sheet Activities Contributed to the 2008 Global Financial Crisis with Increasing

question 68

Multiple Choice

Off-balance-sheet activities contributed to the 2008 global financial crisis with increasing financial market solvency risk exposure caused by:

• A)loans sold with recourse had contingent liability implications for FIs when these loans went 'bad'
• B)sub-prime mortgages and OBS securities backed by these mortgages peaked prior to the mortgage market collapse
• C)the market for derivatives was opaque and 'trades' complex leading to counterparty risk where firms dealt directly with each other
• D)All of the listed options are correct.

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Definitions:

Mediation

A form of alternative dispute resolution where a neutral third party helps disputing parties find a mutually acceptable solution.

Formal Hearing

A structured legal proceeding where evidence and arguments are presented to determine an outcome in a dispute.

Mediator

A neutral third party who facilitates negotiations and conflict resolutions between disputing parties to reach a mutual agreement.

Ruling

An official decision or determination made by an authority, such as a court, government agency, or regulatory body.