answer the multiple choice. The problem of using borrowed funds for a more risky purpose than...

answer the multiple choice.

The problem of using borrowed funds for a more risky purpose than what they were originally intended for is called which of the following ?

		moral hazard
		default risk
		asymmetrical information

The multiple by which total deposits can increase for every dollar increase in reserves is the ___________.

		required reserve ratio
		money multiplier
		deposit insurance limit

What do an insurance company and a commercial bank have in common?

		Both provide the public with a wide range of financial services.
		All of the options are correct.
		Both link net borrowers with net lenders.

Solutions

Expert Solution

1. default Risk

This is the situation where individuals or organizations are unable to pay their debt obligations and therefore they are exposed in such conditions.

2. Money multiplier

This is the amount a bank generates with in rease in the deposit.

3. Both provide the public with a wide range of financial services

Both bank and insurance companies need to provide the people with options to invest their money and safeguard it as well.

keosha answered 2 years ago

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