Which of the Following May Occur When a Sufficient Number

question 14

Multiple Choice

Which of the following may occur when a sufficient number of borrowers are unable to repay interest and principal on loans, thus causing an FI's equity to approach zero?

• A)insolvency risk
• B)sovereign risk
• C)currency risk
• D)liquidity risk

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Definitions:

Normative Influence

The effect of the expectations of others on an individual's behavior, leading them to conform in order to be accepted or liked.

Normative Influence

The impact others have on us that causes us to comply with their behavior or beliefs to gain their approval and acceptance.

Social Contagion

The phenomenon where behaviors, attitudes, or emotions spread through groups or societies, akin to the transmission of diseases.

Injunctive Norms

Social norms that define what is perceived as approved or disapproved behavior within a group or society.