A Risk a Bank Takes on by Offering Long-Term Fixed

question 17

Multiple Choice

A risk a bank takes on by offering long-term fixed interest rate loans is:

• A) the loss of real returns due to anticipated inflation
• B) the gain that could be made from offering short-term loans
• C) the loss of real returns due to an unexpected inflation surprise
• D) the gains that could have been made if the money were invested in an alternative asset
• E) the loss of customers wanting flexible interest loans

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Definitions:

Federal Minimum Wage

The lowest hourly wage that employers can legally pay their workers as mandated by the U.S. federal government.

Redlining

Discriminatory practice by banks or other financial institutions of denying or limiting financial services to certain neighborhoods based on racial or ethnic composition.

Minority Neighborhoods

Urban areas predominantly inhabited by members of racial or ethnic minority groups, often shaped by historical, social, and economic factors.

Mortgages

Loans specifically provided for the purchase of property or real estate, where the property itself is used as collateral for the loan.