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

Q: 4) All else the same, if a bank's liabilities are more sensitive to interest rate fluctuations than…

A: Sensitivity to interest rate fluctuations comes under the phenomenon of Interest rate Gap, this…

Q: The two most pressing demands for liquidity from a bank come from, first, customers withdrawing…

A: Liquidity in banking refers to the capacity or the ability of the banks to give cash to customers on…

Q: All of the following statements are True about Bank overdrafts: If no offsetting allowed, should be…

A: Bank Overdraft:  A bank overdraft occurs when there is not enough money to do the transaction but…

Q: How can a bank mitigate LIQUIDITY RISK? Hold a large percentage of its liabilities in Core Deposits…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: Which of the following statements is false? A.   Moral hazard is the lack of incentive to guard…

A: Analysis of the options:   A: Moral hazard is the lack of incentive to guard against risk where one…

Q: regulators

A: Banking regulators serve as a guidepost to monitor the activities of banks across the region. They…

Q: Assume that banks aim to hold no excess reserves. The AAA bank responds to the change in its reserve…

A: Reserve Ratio is the minimum proportion of total deposits that bank need to keep as reserves. A bank…

Q: Which of the following actions cannot be used by banks to increase reserves? A. Sell Treasury…

A: Reserves  are parts of the income of a corporation that have been set aside to improve the financial…

Q: Which of the following statements about bank capital are TRUE? Banks hold equity capital to make…

A: Banks Capital = Banks Assets - Banks Liabilities Banks capital is a representation of the net worth…

Q: The following is true for banks managing interest rate risk:     In refinancing risk, banks gain…

A: Step 1 The ability of the bank or financial institution to refinance the matured liabilities at very…

Q: Which among the following is not a liquid asset Cash deposited in a bank O Stock O Bills receivable…

A: A liquid asset is the asset which can be quickly converted into cash.

Q: Which one of the following statements is FALSE? Select one: O a. Holding more liquid funds will…

A: Introduction and explanation :The yield of an asset refers to the return or profit generated from…

Q: You open a deposit with capital. The bank uses most of your money to make a loan to jungle Jim’s…

A: Bank deposits consist of money placed into banking institutions for safekeeping. These deposits are…

Q: When deposit inflows exceed loan demand a bank can A. No answer text provided. B. buy back shares…

A: The correct answer is D. invest in safe fixed income securities. Explanation:The correct answer is…

Q: what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM  in banking to  BANKS . Give an example

A: MORATORIUM- is an option available to borrower to defer the EMI payment. During the moratorium…

Q: 1. Explain how capital reduces banking risks. Discuss the importance of cash flows and economic…

A: Capital reduces banking risks:  It reduces banking risk by protecting against insolvency. It is used…

Q: True or False (Correct the wrong answer) 1) Deposits are considered as assets in the bank’s balance…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: TRUE OR FALSE 1. Short-term financial policies that are flexible with regard to current assets…

A: 1. Short-term financial policies that are flexible with regard to current assets includes keeping…

Q: Overdrafts are a result of a. loans made against certificates of deposit b. banks paying wire…

A: Very easy and low cost convenient way of getting loan are draft loans.

Q: Why do banks hold reserves? How do banks decisions on reserves affect the money supply?

A: Bank reserves are the minimum cash requirements that must be kept by financial firms or institutions…

Q: How does capital protect a bank from failure?  Why are banks currently holding capital well above…

A: Introduction: Capital is a bank's own funds and it is the money obtained from its shareholders and…

Q: What does 'deleveraging' mean? a) Financial institutions cutting back in lending b) Financial…

A: Leverage shows how much is the debt and how much is the equity and this is very important because…

Q: Prove the statement with example "A bank should not sacrifice ether safety or liquidity to earn a…

A: Lending and accepting deposits are the two foremost basic functions as well as the very reason for…

Q: Outline the main financial risks exposed by commercial banks and their implications on the value of…

A: The danger of losing money on an investment or business endeavor is referred to as financial risk.…

Q: matic increase in bank holding companies?

A: The dramatic increase in bank holdingcompanies:Holding companies:The holding company is an…

Q: I have questions about whether purchased funds are recorded as an asset or liability on a bank's…

A: Whether purchased funds are recorded as an asset or liability on a bank's balance sheet depends on…

Q: Explain each action below is appropriated or not when a bank manager feels the bank is holding too…

A: Capital is the amount that remains after subtracting a bank's fixed liabilities from its assets…

Q: when required reserves fall, banks cease granting new loans, which cause _________(assets/…

A: In Banking Sector, when new loans are given which results in flow of money, it is said that money is…

Q: How does the creation of a Treasury STRIP help the government raise cash? Seleccione una: a. It does…

A: The separation of interest and principal amount on security and trading is also done separately then…

Q: A bank is insolvent if Group of answer choices its assets are less than its liabilities. it is…

A: Accounting insolvency happens when the value of a company's debts is more than the value of its…

Q: If a bank has , rate-sensitive assets than liabilities, then in interest rates will increase bank…

A: Lets understand the meaning of rate sensitive asset and liabilities. Rate sensitive asset and…

Q: When using profitability, liquidity and capital adequacy to assess a bank annual report what does it…

A: Whenever stakeholders need to measure the financial position or the credibility of any company, they…

Q: Given a financial institution that make money in three ways: interest income, interest income, and…

A: Banks and Financial institutions make most of their money from loaning and re-loaning money. Low…

Q: Question 10 All of the following statenments are True about Bank overdrafts: O A. O B. If no…

A: Bank overdraft is like a loan  or credit where the bank provides its customer credit to allow a…

Q: Match the best answer to each statement. This category include short-term, highly liquid investment…

A: Current assets refer to the assets of a company that are held for the short term and capable of…

Q: In certain scenerios, some companies may choose to finance with a bank loan specifically because of…

A: Interest payment deduction can be claimed on borrowings while computing business income provided…

Q: As a result of the COVID-19 crisis, company A has decided to sell its receivables to a bank in…

A: Solution:- Discussion of the effect of this financial decision on the company's current ratio, quick…

Q: 10) Off-balance sheet activities involving guarantees of securities and back-up credit lines A) have…

A: Financial transactions and agreements that are not shown on a bank's balance sheet but may…

Q: 9. What type(s) of corrective action might bank regulators take against a 'problem bank'? A. Examine…

A: A problem bank is referred to as a bank that is in potential danger of failure.

Q: Njenge Bank has the following balance sheet (in millions). Liabilities and Equity. Deposits…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: ring and explain its advantages and disadvantages. Why might a bank be interested in a company’s…

A: Gearing : In simple words, gearing refers to the ratio of the company debt to equity. It depicts how…

Q: hich one is not an incentive for a bank to Securitize its mortgage loans? A) Reduce insurance…

A: The objective of the question is to identify which among the given options is not a reason for a…

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.