The global financial crisis that began in mid-2007 resulted in part because of a failure to adequately measure what key variables?
A)The ability of borrowers to repay loans and the repayment history of loans originated by individuals
B)The ability of borrowers to repay loans and the willingness of the FDIC to cover bad bank loans
C)The repayment history of loans originated by individuals and the willingness of the FDIC to cover bad bank loans
D)The strength of the housing market and number of new loans being originated
E)The number of new loans being originated and the commissions being paid to loan originators

Question

Quizplus · Accepted Answer

The global financial crisis was largely caused by the failure to adequately measure the ability of borrowers to repay loans and the repayment history of loans originated by individuals. This led to a large number of bad loans being made, which eventually contributed to the collapse of financial institutions and the global economy.

The Global Financial Crisis That Began in Mid-2007 Resulted in Part