E1 Banks Ordered to Hold More CapitalU.K. banks must hold more capital as their holdings of consumer debt soars.Source: The Guardian, June 27, 2017What is the "capital" referred to in the news clip? How might the requirement to hold more capital make banks safer?The "capital" that is referred to in the news clip isRequirements to hold more capital make banks safer becauseO A. physical capitalO A. holding more capital increases M1B. government investment in the bankO B. holding more capital increases M2C. monetary baseOC. the requirement to hold more capital makes the possibility of failureless likelyD. owners' investment in the bankO D. interest rates are inversely related to bank capital BNP Paribas avoids DowngradeMoody's credit rating agency says two of France's biggest banks are holding too much risky Greek government debt. Another French bank escaped a downgrade byselling €70bn of investments in risky yacht and jets-leasing businesses.Source: cityam.com, September 15, 2011Explain a bank's "balancing act" and how the over-pursuit of profit or underestimation of risk can lead to a bank failure.A bank's "balancing act" balancesThe over-pursuit of profit or underestimation of risk can lead to bank failure becauseO A. the number of depositors against the number of borrowers;some borrowers default and never repay, which can lead to bank insolvencyO B. the value of chequing accounts against the value of savings accounts;a bank that over-pursues profit will reduce customer service, which decreases the number of depositorsO C. return against risk;some borrowers default and never repay, which can lead to bank insolvencyO D. cash in ATMS against cash in chequing accounts;a bank that over-pursues profit will not spend enough time on customer service, which decreases the number of depositors

If a bank wants to expand its base of capital, it could do so through retaining of profits or…

Banks Ordered to Hold More Capital U.K. banks must hold more capital as their holdings of consumer debt soars. Source: The Guardian, June 27, 2017 What is the "capital" referred to in the news clip? How might the requirement to hold more capital make banks safer? The "capital" that is referred to in the news clip is Requirements to hold more capital make banks safer because O A. physical capital O A. holding more capital increases M1 O B. government investment in the bank O B. holding more capital increases M2 OC. the requirement to hold more capital makes the possibility of failure less likely O C. monetary base O D. owners' investment in the bank D. interest rates are inversely related to bank capital

Banks Ordered to Hold More Capital U.K. banks must hold more capital as their holdings of consumer debt soars. Source: The Guardian, June 27, 2017 What is the "capital" referred to in the news clip? How might the requirement to hold more capital make banks safer? The "capital" that is referred to in the news clip is Requirements to hold more capital make banks safer because O A. physical capital O A. holding more capital increases M1 O B. government investment in the bank O B. holding more capital increases M2 OC. the requirement to hold more capital makes the possibility of failure less likely O C. monetary base O D. owners' investment in the bank D. interest rates are inversely related to bank capital

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Banks Ordered to Hold More Capital
U.K. banks must hold more capital as their holdings of consumer debt soars.
Source: The Guardian, June 27, 2017
What is the "capital" referred to in the news clip? How might the requirement to hold more capital make banks safer?
The "capital" that is referred to in the news clip is
Requirements to hold more capital make banks safer because
O A. physical capital
O A. holding more capital increases M1
B. government investment in the bank
O B. holding more capital increases M2
C. monetary base
OC. the requirement to hold more capital makes the possibility of failure
less likely
D. owners' investment in the bank
O D. interest rates are inversely related to bank capital

BNP Paribas avoids Downgrade
Moody's credit rating agency says two of France's biggest banks are holding too much risky Greek government debt. Another French bank escaped a downgrade by
selling €70bn of investments in risky yacht and jets-leasing businesses.
Source: cityam.com, September 15, 2011
Explain a bank's "balancing act" and how the over-pursuit of profit or underestimation of risk can lead to a bank failure.
A bank's "balancing act" balances
The over-pursuit of profit or underestimation of risk can lead to bank failure because
O A. the number of depositors against the number of borrowers;
some borrowers default and never repay, which can lead to bank insolvency
O B. the value of chequing accounts against the value of savings accounts;
a bank that over-pursues profit will reduce customer service, which decreases the number of depositors
O C. return against risk;
some borrowers default and never repay, which can lead to bank insolvency
O D. cash in ATMS against cash in chequing accounts;
a bank that over-pursues profit will not spend enough time on customer service, which decreases the number of depositors

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