19-63 What Is the Benefit of a Regulatory Guarantee or Insurance

question 57

Multiple Choice

19-63 What is the benefit of a regulatory guarantee or insurance program for liability holders of FIs?

• A)It decreases the likelihood contagious runs.
• B)It increases concerns about the asset quality of FI.
• C)It increases concerns about solvency of an FI.
• D)It provides incentives to liability holders to engage in runs.
• E)It provides preference to those who are first in line to withdraw funds over those last in line.

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Definitions:

Appreciation

Recognition and enjoyment of the good qualities of someone or something, often leading to expressions of gratitude or acknowledgment.

Positive Reinforcement

A method in behavior management that involves rewarding desired behaviors to encourage their recurrence.

Common Misconception

A widely held but incorrect belief or understanding.

Good Wages

Earnings from employment that are considered fair or satisfactory, usually in relation to the standard of living and market conditions.