Question

Deposit insurance

A. reduces the incentives of depositors to monitor the riskiness of their banks' asset portfolios.
B. encourages bank managers to take on greater risks than they otherwise would
C. attracts risk-prone entrepreneurs to the banking industry
D. does all of the above

Answer 1

Answer: Does all of the above

Explanation: Deposits insurance are insurance put about by government to strengthen the safety net for bank depositors in the banking sector.

They protect bank depositors from uncertainty and unforeseen circumstances that may arise in their banks. To do these, they advise bank managers and customers on policies so as to ensure their deposits are safe(depositors) and the bank doesn't liquidate (bank Managers)