A well-capitalized financial institution has ________ to lose if it fails and thus is ________...

1) The result of the too-big-to-fail policy is that ________ banks will take on ________ risks, making bank failures more likely.

A) small; fewer

B) small; greater

C) big; fewer

D) big; greater

2) A problem with the too-big-to-fail policy is that it ________ the incentives for ________ by big banks.

A) increases; moral hazard

B) decreases; moral hazard

C) decreases; adverse selection

D) increases; adverse selection

3) The too-big-to-fail policy

A) reduces moral hazard problems.

B) puts large banks at a competitive disadvantage in attracting large deposits.

C) treats large depositors of small banks inequitably when compared to depositors of large banks.

D) allows small banks to take on more risk than large banks.

4) Regulators attempt to reduce the riskiness of banks\" asset portfolios by

A) limiting the amount of loans in particular categories or to individual borrowers.

B) encouraging banks to hold risky assets such as common stocks.

C) establishing a minimum interest rate floor that banks can earn on certain assets.

D) requiring collateral for all loans.

27) A well-capitalized financial institution has ________ to lose if it fails and thus is ________ likely to pursue risky activities.

A) more; more

B) more; less

C) less; more

D) less; less