Write the letter corresponding to each term in the blank next to its definition. No terms are used more than once and not all terms are used. 1. Definition Terms Financial instruments should be priced equal to the present value of all future income flows that they will generate. A series of 3 international agreements negotiated in Switzerland intended to ensure the stability of the banking system by regulating bank capital and financial A. Arbitrage . Bank Panic C. Basel Accords D. Canada Deposit risk. Periodic payments made from a firm's net income to its Owners. Insurance Corporation (CDIC) Classical Theory of Asset Pricing E. A solvent bank experiencing a run by its depositors may experience a liquidity crisis and attempt a bulk liquidation of assets. Due to the urgency of the bank's need for funds, these assets are often sold below market value. F. Collateralized Debt Obligation (CDO) G. Common stock H. Debt deflation L Dividends J. Equity capital K. Fire Sale L. Leverage ratio A bank's equity capital divided by its total assets. Generally, banks are required to maintain it at a -11 minimum of 3%. Profit-seeking people buy underpriced assets in orderM. Principal-agent problem to resell them at higher prices. Their behaviour drives N. Residual claimant the asset price to its fair value. O. Short sales During a severe financial crisis, the collapse in aggregate demand for goods and services can drive down their price level and increase the real burden of interest and principal payments made by borrowers