Which of the Following Statements Is True

question 19

Multiple Choice

Which of the following statements is true?

• A)The more diversified a financial intermediary, the higher the probability that it will default on its obligations and the more risky and illiquid the claims.
• B)The less diversified a financial intermediary, the higher the probability that it will default on its obligations and the more risky and illiquid the claims.
• C)The more diversified a financial intermediary, the lower the probability that it will default on its obligations and the more risky but also the more liquid the claims.
• D)The more diversified a financial intermediary, the higher the probability that it will default on its obligations and the more risky but also the more liquid the claims.

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Definitions:

Present Value

The present value of a future sum or cash flow series, considering a determined rate of return.

Compound Interest

Interest on both the initial principal and the interest that has been added to this principal.

Order Of Operations

The rules determining the sequence in which operations (addition, subtraction, multiplication, and division) should be carried out in a mathematical expression.

Compound Interest

Interest that is figured on the base amount initially invested or borrowed, along with the previously gathered interest.