Consider a loan innovation made to spread risk by having several lenders each contribute a small part of the overall loan. This type of innovation will help only with systemic risk help with idiosyncratic and systemic risk help only with idiosyncratic risk not change the riskiness of the loan

Consider a loan innovation made to spread risk by having several lenders each contribute a small part of the overall loan. This type of innovation will help only with systemic risk help with idiosyncratic and systemic risk help only with idiosyncratic risk not change the riskiness of the loan

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Financial Institutions and Federal Bank

The word financial institution is a kind of business organization that deals with the financial activities of a nation. These activities include accepting deposits, making payments, granting loans and advances, transferring funds, holding shares, providing credits, purchasing and selling foreign exchanges, investments in shares, futures commodities, and many more.

Question

Consider a loan innovation made to spread risk by having several lenders each
contribute a small part of the overall loan.
This type of innovation will
help only with systemic risk
help with idiosyncratic and systemic risk
help only with idiosyncratic risk
not change the riskiness of the loan

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