Question #11
Reading: Reading 11 Analysis of Financial Institutions
PDF File: Reading 11 Analysis of Financial Institutions.pdf
Page: 4
Status: Correct
Correct Answer: B
Question
Systemic risk in financial services is least likely to:
Answer Choices:
A. concern the co-movement of an institution’s asset values with the overall market
B. have consequences for the economy as a whole
C. be caused by interdependencies in the financial system
Explanation
Systemic risk refers to the risk that impairment in one part of the financial system could
spread throughout other parts of the financial system, and then negatively affect the
entire economy. Note that systemic risk is distinct from systematic (beta) risk.