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    Question

    "Haircut" in the context of banking and valuation refers

    to:
    A A discount applied to the market value of an asset used as collateral. Correct Answer Incorrect Answer
    B Salary deduction of employees. Correct Answer Incorrect Answer
    C Reduction in the number of branches. Correct Answer Incorrect Answer
    D Selling an asset at a premium. Correct Answer Incorrect Answer
    E The fees charged by the bank for lockers. Correct Answer Incorrect Answer

    Solution

    A haircut is the difference between the market value of an asset and the amount that can be used as collateral for a loan (to provide a safety buffer for the lender).

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