The Manner in Which CDIC Deposit Insurance Is Set Up

question 69

Multiple Choice

The manner in which CDIC deposit insurance is set up in Canada encourages banks to

• A)be too conservative in their lending practices.
• B)maintain excess reserves that are too great.
• C)make riskier loans than they otherwise would.
• D)reject some loans that probably would be profitable.

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Definitions:

Goodness-of-fit Test

A statistical test used to determine how well observed data fit the expected distribution.

Two-way Classification

A method of organizing data that involves two independent variables to understand the relationship between them and their impact on a dependent variable.

Chi-square Technique

A statistical method used to assess the differences between observed frequencies and expected frequencies in one or more categories.

Qualitative Variables

Variables that describe or categorize attributes or characteristics of a sample or population, without implying any order or numerical value for comparison.