Which Is of the Statements Below Is True

question 37

Multiple Choice

Which is of the statements below is true?

• A)An FI will earn fees when arranging a large loan, even if it sells part or all of the loan later.
• B)Like reserve requirements, the capital adequacy requirements imposed on FIs are a burden as long as required capital exceeds the amount the FI believes to be privately beneficial.
• C)In addition to credit risk and interest rate risk, holding loans on the balance sheet can increase the overall illiquidity of an FI's assets.
• D)All of the listed options are correct.

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Definitions:

Economic Profits

Profits exceeding the opportunity costs of a company's resources, indicating it is generating returns beyond the next best alternative.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, in economic theory, representing the surplus generated by an entity in economic activities.

Long-run Equilibrium

A state where all factors of production can be varied, and all economic participants have fully adjusted to any changes, leading to a stable economic condition.

Constant Costs

Costs that do not change with the level of output or production, remaining stable irrespective of business activity levels.