Designed to reduce moral hazard created by deposit insurance

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Reference no: EM131089544

Which of the following are regulations that are designed to reduce the moral hazard created by deposit insurance?

Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. (Please highlight the correct answer(s))

-Regulators can restrict competition so that banks are not under as much pressure to engage in risky investments.

-U.S. banks are not allowed to hold any common stock or bonds.

-U.S. banks are not allowed to hold common stock or bonds that are below investment grade.

-U.S. banks cannot make loans to single borrowers that exceed 50 percent of their capital.

-Regulators can prohibit banks from making certain types of risky loans and from purchasing particular securities.

Reference no: EM131089544

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