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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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