Which statement about leveraging is true?
a. It is safer for banks to have a high level of leverage than a low level of leverage.
b. A higher amount of leveraging means a higher potential for profit.
c. Financial institutions avoid being highly leveraged due to the potential for loss.
d. Banks can only use their own money as leverage.
b. A higher amount of leveraging means a higher potential for profit.
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Which of the following is the most important advantage of using money rather than relying exclusively on barter?
A) The use of money encourages people to diversify and learn to do more things for themselves. B) The use of money encourages people who want to exchange to become more closely acquainted. C) The use of money lowers the cost of locating people with whom to exchange. D) The use of money reduces opportunities for fraud and theft. E) The use of money reduces selfishness because money in itself has no value.
The price level in the economy between 2014 and 2015 rose from 100 to 110. Between 2015 and 2016, the price level rose from 110 to 121. How does the short-run Phillips curve predict the unemployment rate will change as a result?
A) The unemployment rate will increase since inflation increased. B) The unemployment rate will decrease since inflation increased. C) The unemployment rate will decrease since inflation decreased. D) The unemployment rate will not change since there is no change in the rate of inflation.
Germany and Japan pay a higher price for raising capital because of
A) having rather illiquid securities markets. B) unresolved stockholder-lender and manager-stockholder conflicts. C) allowing banks to hold substantial ownership shares in large firms. D) shutting large firms out of those securities markets.
For which of the following purchases would the absolute price elasticity of demand be smallest?
A) a sports car B) utilities C) chewing gum D) a cell phone