How do banks manage credit risk?
What will be an ideal response?
Banks manage credit risk through diversification across borrowers, regions, and industries. Bank loan officers conduct credit-risk analysis by screening applicants to eliminate potentially bad risks. Banks also require borrowers to put up collateral in return for some loans. Banks may ration credit by limiting the amount of a loan or denying credit to a borrower at the current interest rate. Banks may keep track of whether borrowers are obeying restrictive covenants. Banks may establish long-term business relationships with a borrower in order to better monitor their activities.
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Every society faces some basic economic choices such as
a. what quantities of goods and services to produce. b. which resources to use. c. who gets to have what share of the output. d. All of these.
The roots of the European Union are in agreements within the coal and steel industries
Indicate whether the statement is true or false
At an output level of 100, a monopolist faces MC = 15 and MR = 17. At output level q = 101, the monopolist faces MC = 16 and MR = 15. To maximize profits, the firm
A) should produce 100 units. B) should produce 101 units. C) The firm cannot maximize profits. D) The firm is not a monopoly.
The banking system operates in such a way that in recessions, when loans (investments) are needed to stimulate economic activity, the system does not generate those loans
Indicate whether the statement is true or false