Which of the Following Was the Main Reason for Increased

question 65

Multiple Choice

Which of the following was the main reason for increased counterparty risk in the shadow banking system prior to the financial crisis of 2007-2009?

• A) increased leverage
• B) government insuring money market deposits
• C) many firms borrowing long term for short-term investments
• D) trading of derivatives on exchanges

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Definitions:

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Random Factors

Variables or elements in an analysis or experiment that are subject to randomness and unpredictability.

Stock Return

The change in value of a stock investment over a period of time, including dividends, expressed as a percentage of the investment's initial cost.

Market Return

The total gain or loss experienced by an investment or a collection of investments in the market over a specified period, typically including both capital gains and dividends.