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.
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.
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 21P
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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
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