A spike in interest rates ignited the S&L industry’s trouble…

A spike in interest rates ignited the S&L industry’s troubles, which were fanned into a bad-asset problem with easy credit, including an increase in the deposit insurance limit, FSLIC notes and other forbearance, junk bonds and brokered deposits (a.k.a. hot money.) What was the main source of easy credit in the mortgage crisis besides the SEC’s decision to allow Wall Street investment firms to hold less capital as a cushion against potential losses on money they borrowed?

Explain why each of the following statements is false. 1. Th…

Explain why each of the following statements is false. 1. The main purpose for pro rata quota share reinsurance is to stabilize loss experience. 2. Excess of loss per policy reinsurance is the best option if the goal is providing surplus relief. 3.  If an analysis of losses indicates the presence of inflationary trends, the best approach is to treat these losses as not credible.