Multiple Choice
Which of the following is a drawback of charging flat deposit insurance premiums?
A) The deposit insurer acts more like a private property & casualty insurer when charging flat premiums.
B) It discourages banks from taking risks.
C) Both high risk and low risk banks are charged the same premium rate.
D) High risk banks will be charged an unreasonably high premium rate.
E) Premiums reflect the expected private costs or losses to the insurer from the provision of deposit insurance.
Correct Answer:
Verified
Correct Answer:
Verified
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