Statement A: Capital acts as regulator of growth. If bank is trying to grow too fast, shortage of capital will stop the bank from growing because of Capital adequacy regulations Statement B: Capital provides funds for growth. The more capital a bank has the more it will be able to expand and diversify Select one: a. Dont agree with both A and B O b.Agree with both A and B O C Agree with B but not with A d. Agree with A but not with B

Statement A: Capital acts as regulator of growth. If bank is trying to grow too fast, shortage of capital will stop the bank from growing because of Capital adequacy regulations Statement B: Capital provides funds for growth. The more capital a bank has the more it will be able to expand and diversify Select one: a. Dont agree with both A and B O b.Agree with both A and B O C Agree with B but not with A d. Agree with A but not with B

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Assume two banks are equal to each other in size in terms of total assets. The bank which has more liquidity will have a lower return on equity Select one: O True O False
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 loansb.Selling the bank's holding of mortgage-backed securities and using the proceeds to decrease liabilitiesc.Repurchasing shares of the bankd.Increasing dividend payout ratio to reduce retained earnings.
Which of the following is NOT an advantage of depositing funds into a bank account (compared to directly purchasing corporate bonds and shares): Options 1. Higher transactions costs 2. Monitoring performed by the bank on behalf of the depositor 3. Better liquidity if funds are needed quickly 4. Efficient payment services 5.Reduced price risk if funds are needed immediately
19. _____________ are the financial intermediaries between those who have surplus money and those who need money. a. Financial markets b. Public institutions c. None of the options d. Private firms
Give typing answer with explanation and conclusion
all of the following statements about a bank's capital are correct except: bank capital is the cushion a bank has against a sudden drop in the value of its assets a bank is more profitable the more capital it holds bank capital decreases as interest rate increase bank capital is what would be left after a bank's owner sold all the assets and paind off all the liabilities
1
How the action of a bank manager below can solve holding too much capital problem?• Sell or retire stock• Increase dividends to reduce retained earnings• Increase asset growth via debt
Which of the following is most consistent with using debt to reduce agency costs or conflicts? Question 11 options: Increasing debt reduces a firm’s business risk The interest paid on debt reduces taxable income and income taxes The interest paid on debt reduces cash that management of a firm might otherwise waste or use poorly The issuance of debt helps firms increase their credit rating
Banking
1 What is the Advantage and Disadvantage of Liquidity management under reserve shortfalls based on the below 4 points1? securities sale 2. reduce loans 3. emergency borrowing from CB 4. borrowings from other banks
Assume that you are the senior manager of a leading commercial bank in Oman. You are aware that there are no capital controls in Oman and that Omani Rial is pegged against the dollar. Your past experience tells you that while is some weeks your bank has surplus liquidity, in other weeks there are deficits. You are trying to decide whether to use an Asset Conversion Strategy or a Borrowed Liquidity Strategy in managing your bank's liquidity position. Which of these two strategies, would you prefer and why ?

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