The bank wants to sell more shares of stock, keep more of its earnings, buy more Treasury securities, and give fewer business loans. Regulators have always given it a good rating, but this financial institution thinks that by using these strategies, regulators will give it an even better rating. Explain in detail why you think the plans of the financial institution will make both regulators and shareholders happy.
The bank wants to sell more shares of stock, keep more of its earnings, buy more Treasury securities, and give fewer business loans. Regulators have always given it a good rating, but this financial institution thinks that by using these strategies, regulators will give it an even better rating. Explain in detail why you think the plans of the financial institution will make both regulators and shareholders happy.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The bank wants to sell more shares of stock, keep more of its earnings, buy more Treasury securities, and give fewer business loans. Regulators have always given it a good rating, but this financial institution thinks that by using these strategies, regulators will give it an even better rating.
Explain in detail why you think the plans of the financial institution will make both regulators and shareholders happy.
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