When the Central Bank Acts as a Lender of Last

question 59

Multiple Choice

When the central bank acts as a lender of last resort, it:

• A) requires the borrower to put up collateral.
• B) is able to confiscate some of the borrower's assets.
• C) requires voting rights on the borrower's board of directors.
• D) takes over ownership of the borrower.

---

Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained rather than distributed to shareholders or used to pay dividends, often reinvested into the business.

GAAP

Generally Accepted Accounting Principles represent the customary set of rules for financial accounting that are utilized in a particular jurisdiction.

Principles-based Approach

A method of regulation that emphasizes the spirit of the laws and principles behind them, rather than rigid adherence to specific rules.