When a Financial Institution Is Deemed Too Systematically Important to Go

question 73

Multiple Choice

When a financial institution is deemed too systematically important to go under, it is ________. This leads to ________.

• A) a monopoly; above-marginal cost pricing
• B) too big to fail; moral hazard
• C) an "umbrella" bank; less competition
• D) a bank-holding company; adverse selection
• E) an investment bank; nationalization

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Definitions:

Unrecognized Past Service Cost

Costs associated with pension plan benefits earned by employees in prior periods not yet reflected in financial statements.

Periodic Pension Expense

The total expense recognized in a period related to an organization’s pension plan.

Funded Status

The financial condition of a pension or other post-employment benefit plan, calculated as the difference between plan assets and obligations.

Defined Contribution Plan

A retirement plan in which the employer, employee, or both make contributions on a regular basis, but the final amount received by the employee depends on the plan's investment performance.