25-39 Which of the Following Is NOT a Contractual Mechanism

question 54

Multiple Choice

25-39 Which of the following is NOT a contractual mechanism used by FIs to control credit risks?

• A)Diversifying across different types of risky borrowers.
• B)Requiring higher interest rate spreads for higher risk borrowers.
• C)Requiring more collateral for the bank over the assets of more risky borrowers.
• D)Making lending decisions only in centralized locations.
• E)Placing more restrictive covenants on the actions of more risky borrowers.

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Definitions:

Major Organic Product

The primary organic compound formed in the highest quantity in a chemical reaction involving organic reactants.

Chlorination

The addition or substitution of chlorine in a molecule, commonly used in disinfection and organic synthesis processes.

Reactivity

A term describing how readily a substance undergoes chemical change, influenced by factors like chemical structure, surrounding environment, and energy barriers.

Electrophilic Aromatic Substitution

A chemical reaction in which an atom, typically a halogen, is substituted for a hydrogen atom on an aromatic ring, facilitated by an electrophile.