Risk managers were keen to use unregulated derivative mortgage products to shift risk off their balance sheets.Which of the following describes the consequence of failing to regulate investment business activities in a free-market environment?

Question

Quizplus · Accepted Answer

Failing to regulate investment business activities in a free-market environment can lead to unscrupulous participants using opportunities to act exploitatively, as seen in the case of the unregulated derivative mortgage products used by risk managers to shift risk off their balance sheets. This can ultimately result in negative consequences for the market and the economy as a whole.

Risk Managers Were Keen to Use Unregulated Derivative Mortgage Products