Banks hold capital because:单项选择题

题目图片
A

a. it increases the likelihood of bankruptcy

B

b. higher capital increases the return on equity

C

c. they are required to by regulatory authorities

D

d. higher capital increases the returns to the owners

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Net regulatory burden for banks is higher because regulators may require the bank to:[Fill in the blank]

Imagine a bank subject to both traditional capital requirements (using capital ratios) and a leverage ratio requirement (using the debt-to-assets ratio). The bank is currently considering transactions that will keep the total value of its assets constant. However, these transactions will reduce the share of cash and safe assets and increase the share of risky mortgages on the bank’s balance sheet. These assets have different risk weights for the purposes of banking regulation. The bank is analyzing how these transactions will affect the minimum dollar amount of equity capital required under each of the previous regulations. In this context, consider the following statements about the effects of these changes in the bank’s balance sheet. Which statement is correct?

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Choose A, B, C or D as the best answer.30. The author’s main argument is that __________.

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