In banking and finance, executives often have an incentive to take too ______ risks.
A) many "narrow band"
B) few "narrow band"
C) many "long tail"
D) few "long tail"

Question

Quizplus · Accepted Answer

"Long tail" refers to risks that have a low probability of occurring but would result in significant losses if they did occur. In banking and finance, executives often have incentives (such as bonuses) tied to short-term gains, which can lead them to take on too many long tail risks in pursuit of higher profits. Therefore, the choice of many "long tail" risks is the best fit for this scenario.

In Banking and Finance, Executives Often Have an Incentive to Take