Multiple Choice
Which of the following is an example of how incentive structures contributed to the collapse of investment banks?
A) The bonus structure of most executives was tied to long-term profitability.
B) The ratings agencies were paid attractive fees by investment banks seeking high ratings for their securities.
C) Mortgage-backed securities were closely scrutinized in order to minimize risk and obtain higher ratings.
D) Despite SEC regulations, investment banks kept leverage ratios low in order to increase profits.
Correct Answer:
Verified
Correct Answer:
Verified
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