12. Gary was considering the role of haircuts in the repo market (repurchase agreements). Specifically, he was interested on how the choice of haircut should depend or not on the price of the asset being used as collateral. In this context, which of the following statements is correct? Group of answer choices

a Haircuts should only be large when the price of the asset is expected to significantly drop.

b Haircuts should not be larger when there is more uncertainty about the price of the asset, and this price could either increase or drop more in value until repayment.

c Haircuts should be lower if there is higher uncertainty about the price of the asset and this price can become significantly higher or lower until the repayment date. Haircuts should be large for risky borrowers even if the asset is liquid and has a very stable price that is not expected to significantly change until repayment.

d Haircuts should be larger if there is higher uncertainty about the price of the asset and this price can become significantly higher or lower until the repayment date.

e Haircuts should only be large when the price of the asset is expected to significantly increase. Haircuts should not be larger when there is more uncertainty about the price of the asset, and this price could either increase or drop more in value until repayment.