Which of the following are examples of maturity transformations? Which are subject to a bank-run-like phenomenon in
Question:
Which of the following are examples of maturity transformations? Which are subject to a bank-run-like phenomenon in which fear of a failure becomes a selffulfilling prophecy? Explain.
a. You sell tickets to a lottery in which each ticket holder has a chance of winning a $10,000 jackpot.
b. Dana borrows on her credit card to pay her living expenses while she takes a year-long course to upgrade her job skills. Without a better-paying job, she will not be able to pay her accumulated credit card balance.
c. An investment partnership invests in office buildings. Partners invest their own funds and can redeem them only by selling their partnership share to someone else.
d. The local student union savings bank offers checking accounts to students and invests those funds in student loans.
Step by Step Answer: