Which of the following is not one of the things that manager can do to reduce the capital ratio (increase the equity multiplier) if he or she finds that the bank has a capital surplus?O Buying back some of the bank's stock. O Paying out higher dividends to stockholders. O Selling more CDs and use the funds to invest in loans or securities. O Selling some mortgage-backed securities and use the proceeds to reduce liabilities.

Which of the following is not one of the things that manager can do to reduce the capital ratio (increase the equity multiplier) if he or she finds that the bank has a capital surplus?O Buying back some of the bank's stock. O Paying out higher dividends to stockholders. O Selling more CDs and use the funds to invest in loans or securities. O Selling some mortgage-backed securities and use the proceeds to reduce liabilities.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Which of the following is not one of the things that manager can do to reduce the capital ratio (increase the equity multiplier) if he or she finds that the bank has a capital surplus?O Buying back some of the bank's stock.
O Paying out higher dividends to stockholders.
O Selling more CDs and use the funds to invest in loans or securities.
O Selling some mortgage-backed securities and use the proceeds to reduce liabilities.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Check all that apply. Use more debt financing in its capital structure and increase the equity multiplier. Use more equity financing in its capital structure, which will increase the equity multiplier. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total assets turnover.
Our textbook claims that one of the key services banks provide is maturity intermediation: what exactly does this mean? (Choose an answer from the list below; only one is correct.) Reference: Chapter 11 and/or Chapter 1 Banks borrow money from their younger customers and lend it to their older customers. Banks gather small deposits and use them to make large investments, allowing small investors to collectively buy large assets. Banks are funded with deposits that they promise to return on demand but use them to make long-term loans, which creates a mismatch in the maturities of their assets & liabilities.
Koffman Corporation is trying to raise capital. What method would be the least risky to raise capital if it has a less-than-favorable credit rating? A. Stock issuance, since a credit rating won’t negatively affect Koffman’s ability to sell stock. B. With low credit, Koffman doesn't have any options for raising capital. C. Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating. D. Bond issuance, since additional debt can provide the company with more leverage.
Which of the following would reduce a firm's WACC after tax? a. A firm invests in an average-risk project using equity, rather than debt financing. b. A supermarket chain decides to establish hardware stores which increases its systematic risk. c. A firm issues shares and uses the proceeds to pay off a bank loan. d. A firm issues bonds and uses the proceeds to repurchase stock. e. A firm significantly improves its operating cost control to boost profits.
The pecking order states that firms should: Group of answer choices issue debt first. use internal financing first. always issue debt then the market won't know when management thinks the security is overvalued. issue new equity first.
What comment or conclusion can be made about this? Large amounts of national debt can lead to higher interest rates and lower stock prices. Stocks are a reflection of investor confidence. If those investors lose confidence in where those companies operate then their stock price will take a hit.
True or False: Private equity investors can easily sell or exchange their investments for cash anytime? True or False: Private equity firms only invest in small companies? True or False: Everything else stays the same. If a company's gross debt amount increases, its equity value decreases?
Saving cash in the bank is not as attractive as it was in the past, and RBL is looking to invest some of its surplus cash. In a meeting with senior managers in the company, you mention the Modern Portfolio Theory which was pioneered by Markowitz. Required: Explain to the senior managers, a. The purpose of the Markowitz Portfolio Theory, b. What is the key component of the theory.