A Key Obstacle Facing Regulators Who Want to Prevent Financial

question 47

Multiple Choice

A key obstacle facing regulators who want to prevent financial institutions from taking excessive risks is the difficulty in:

• A) finding diversified pools of assets to reduce risk.
• B) drawing the line between excessive and appropriate risk taking.
• C) eliminating idiosyncratic risk through diversification.
• D) distinguishing between equity and debt financing.

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Definitions:

Vendor-Managed Inventory

A supply chain initiative where the supplier assumes the responsibility of managing inventory levels for the customer.

Inventory Control

The regulation of inventory levels within a business to manage supply, minimize costs, and prevent shortages or surpluses.

Just-In-Time (JIT) System

A supply chain management strategy that reduces inventory costs by delivering raw materials and components just as they are needed in the production process.