As a bank manager, you conclude that the bank has a capital shortfall and should decrease the equity multiplier (i.e., increase the capital ratio) to prevent bank failure. Which of the following is one of things you can do to manage capital adequacy of the bank? a.Acquiring more reserves through borrowing from fed funds loans b.Selling the bank's holding of mortgage-backed securities and using the proceeds to decrease liabilities c.Repurchasing shares of the bank d.Increasing dividend payout ratio to reduce retained earnings.

Q: Minimum capital requirement is a popular tool for bank regulation around the world. Some commented…

A: The main disagreement is that the risk is fewer when the bank upsurges its capital. In other sense,…

Q: Read the following premise carefully and answer the questions specifically and in detail. You must…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: regulators

A: Banking regulators serve as a guidepost to monitor the activities of banks across the region. They…

Q: Which of the following actions cannot be used by banks to increase reserves? A. Sell Treasury…

A: Reserves  are parts of the income of a corporation that have been set aside to improve the financial…

Q: Which of the following statements about bank capital are TRUE? Banks hold equity capital to make…

A: Banks Capital = Banks Assets - Banks Liabilities Banks capital is a representation of the net worth…

Q: The GAP analysis and EAR analysis a. If GAP is positive and interest rate increases the same on both…

A: Gap analysis is the difference between actual performance and potential performance. It is a…

Q: rates rise, bor

A: The correct option is shown as,

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A: The correct answer is D. invest in safe fixed income securities. Explanation:The correct answer is…

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A: At the time, improper banking activity–the overzealous commercial bank involvement in stock market…

Q: f a bank's credit ratings decrease, How does this affect borrowers, lenders, and financial…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: How does capital protect a bank from failure?  Why are banks currently holding capital well above…

A: Introduction: Capital is a bank's own funds and it is the money obtained from its shareholders and…

Q: What does 'deleveraging' mean? a) Financial institutions cutting back in lending b) Financial…

A: Leverage shows how much is the debt and how much is the equity and this is very important because…

Q: Explain how capital adequacy requirements may affect a commercial bank’s dividend payout and growth…

A: Capital adequacy requirement refers to the amount of capital a bank must have as per the requirement…

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A: This action would enhance liquidity but might not directly impact capital ratios, as cash is already…

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A: Small banks have limited operations and limited exposure and limited type services and limited…

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A: Credit risk transformation refers to the process through which banks and other financial…

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A: Answer: If banks want to volatility in regulatory capital, wanting banking organizations are likely…

Q: If a bank has , rate-sensitive assets than liabilities, then in interest rates will increase bank…

A: Lets understand the meaning of rate sensitive asset and liabilities. Rate sensitive asset and…

Q: Which of the following is not one of the things that manager can do to reduce the capital ratio…

A: Paying out higher dividends to stockholders.

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A: Too big to fail: It characterizes a company or trade division considered to be so profoundly…

Q: 10) Off-balance sheet activities involving guarantees of securities and back-up credit lines A) have…

A: Financial transactions and agreements that are not shown on a bank's balance sheet but may…

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.