25-73 Which of the Following Is NOT a Reason for Using

question 86

Multiple Choice

25-73 Which of the following is NOT a reason for using a bad bank as a vehicle to add value in the loan sale process?

• A)Contracts for managers can be created to maximize the incentives to generate enhanced values from loan sales.
• B)The bad bank enables bad assets to be managed by loan workout specialists.
• C)The bad bank does not need to be concerned about liquidity needs since it does not have any deposits.
• D)Moving the bad loans off the balance sheet of the good bank will improve the markets perception,and thus performance,of the good bank.
• E)The good bank-bad bank structure increases information asymmetries regarding the value of the good bank's assets.

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Definitions:

Extended Problem-Solving

A consumer decision-making process used for high involvement purchases, requiring considerable time and effort in evaluating alternatives.

Reference Group

One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.

Indirect Influence

The subtle, non-direct impact that an entity or action may have on people's decisions, behaviors, or outcomes without explicit instruction or direct intervention.

Consumer Reports

Publications that review and provide advice about products and services based on thorough testing and assessments.