Charging drivers with good records lower premiums than drivers with bad records is an example of an attempt by insurance companies to deal with the problem of
A) adverse selection.
B) moral hazard.
C) failure of policyholders to keep paying their premiums.
D) drunk driving.
Answer: A
Money and Banking
- Banks have a maturity mismatch since
- Which government agency regulates futures markets?
- What regulatory change did Congress approve in 2010 to reduce counterparty risk in the shadow banking system?
- The shadow banking system refers to
- Which of the following is likely to be more of a problem after the introduction of deposit insurance?
- Which of the following is NOT a reason that firms in the shadow banking system were more vulnerable than commercial banks during the financial crisis of 2007-2009?
- The largest institutional participants in capital markets are
- In a defined contribution pension plan,
- Hedge funds have been criticized for
- Which of the following statements is NOT true of consumer finance companies?
- The fee charged by a typical hedge fund are sometimes called:
- Mutual funds
- During the financial crisis, which type of risk was the biggest problem faced by investment banks?
- A syndicate is
- The due diligence process refers to
- The Federal Reserve System was created in response to
- National banks are chartered by the
- All of the following have contributed to increased use of ATMs EXCEPT:
- If you have $2 million in a CD at a commercial bank that is a member of the FDIC, how much of your funds are uninsured?
- Banks are exposed to interest rate risk primarily because
- Explicit provisions in a loan agreement that prohibit the borrower from engaging in certain activities is called:
- How does the use of adjustable-rate mortgages affect interest-rate risk?
- In managing its liabilities to deal with liquidity problems, banks trade off
- The prime interest rate is the