Ask Question
BusinessBusiness
19 April, 04:40

A manager of a savings and loan association responds to reports of a likely increase in federal deposit insurance coverage. She directs loan officers to extend mortgage loans to less creditworthy borrowers. This situation poses

+4
Answers (1)
  1. 19 April, 05:06
    0
    By allowing the loans to the less creditworthy borrowers than this situation poses a moral hazard.

    Explanation:

    Moral hazard can be defined as a situation where one party (who is insured) takes more risks, which it has protection against, and the other party would be bear the risk.

    In the given situation, a manager who sees that there is increase in federal deposit insurance coverage, has directed the loan officers to provide loans to the less creditworthy borrowers, now this decision of his poses a moral hazard because manager knows that by providing loan to such people, there are high chances of default on these loans and here manager is acting in a much more riskier way than he should be.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A manager of a savings and loan association responds to reports of a likely increase in federal deposit insurance coverage. She directs ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
If the charges on the spheres were increased what do you think would happen to the value of a
Answers (1)
A variable like the Fed's discount rate, the rate charged by the federal reserve on borrowed money by banks, is an example of which of the following?
Answers (1)
If a fee of $2,850 earned from a client was debited to Accounts Receivable for $2,580 and credited to Fees Earned for $2,850, which of the following statements would be true? (A) The credit total of the trial balance would be higher by $270.
Answers (1)
A library shelving system has a fi rst cost of $20,000 and a useful life of 10 years. The annual maintenance is expected to be $2,500. The annual benefi ts to the library staff are expected to be $9,000.
Answers (1)
Most childcare facilities care for children in what age range? A. Birth to six years B. Six weeks to five years C. Six months to six years D birth to five years E. Three months to five years
Answers (1)
New Questions in Business
Special-purpose technology is a common way of offering increased customization in manufacturing or services without taking on additional labor costs. True/False
Answers (1)
You are to receive $500 at the end of one year; $250 at the end of two years; $300 at the end of three years. if the interest rate is 5%, what is the present value of these cash flows?
Answers (1)
U. S. based Majestic Co. sells products to U. S. consumers and purchases all of materials from U. S. suppliers. Its main competitor is located in Belgium. Majestic Co. is subject to: Options: O economic exposure. O transaction exposure.
Answers (2)
A comprehensive evaluation of the group of businesses a company has diversified into involves: a. evaluating the attractiveness of industries the company has diversified into and the competitive strength of each of its business units. b.
Answers (1)
Interior Design Group is an all equity firm that has 40,000 shares of stock outstanding. The company has decided to borrow $1 million to buy out the shares of a deceased stockholder who holds 2,500 shares.
Answers (1)
Home » Business » A manager of a savings and loan association responds to reports of a likely increase in federal deposit insurance coverage. She directs loan officers to extend mortgage loans to less creditworthy borrowers. This situation poses
Sign Up Forgot Password?