25-38 Besides Reducing Credit Risks,an FI Has an Incentive to Sell

question 5

Multiple Choice

25-38 Besides reducing credit risks,an FI has an incentive to sell loans it originates for all of the following reasons EXCEPT to:

• A)geographically diversify.
• B)decrease core deposits.
• C)lower reserve requirements.
• D)lower capital requirements.
• E)generate reinvestment income.

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Definitions:

Product Cost

The total of costs directly assigned to the production of a product, including raw materials, labor, and manufacturing overhead.

Period Cost

Expenses directly tied to business operations but not a part of the cost of manufacturing or producing goods, often administrative or sales expenses.

Conversion Costs

The combined costs of direct labor and manufacturing overhead involved in transforming materials into finished products.

Prime Costs

The combined costs of direct material and direct labor required to produce a good.