The principal objective in the creation of _____ is to maximize asset values by separating good loans from bad loans.

Question

Quizplus · Accepted Answer

The concept of a "bad bank" refers to the creation of a separate entity, typically by a failing or troubled bank, in order to isolate and dispose of its non-performing assets. By separating the bad loans from the rest of the bank's assets, the hope is that the remaining "good" assets will be more attractive to potential buyers and investors, ultimately resulting in a higher overall value for the institution. Hedge funds and vulture funds are types of investment funds with different objectives, and there is no such as thing as a "structured bank."

The Principal Objective in the Creation of _____ Is to Maximize