the economics of money, banking, and financial markets

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29. 
    

    To be considered well capitalized, a bank's leverage ratio must exceed ____.
    A) 10 percent
    B) 8 percent
    C) 5 percent
    D) 3 percent
    Answer: C
    Diff: 1 Type: MC Page Ref: 215
    Skill: Recall
    Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems

    
    


30. 
    

    Off-balance-sheet activities ____.
    A) generate fee income with no increase in risk
    B) increase bank risk but do not increase income
    C) generate fee income but increase a bank's risk
    D) generate fee income and reduce risk
    Answer: C
    Diff: 1 Type: MC Page Ref: 215
    Skill: Recall
    Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems

    
    


31. 
    

    The Basel Accord, an international agreement, requires banks to hold capital based on
    ____.
    A) risk-weighted assets
    B) the total value of assets
    C) liabilities
    D) deposits
    Answer: A
    Diff: 1 Type: MC Page Ref: 215
    Skill: Recall
    Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems

    
    


32. 
    

    The Basel Accord requires banks to hold as capital an amount that is at least ____ of
    their risk-weighted assets.
    A) 10 percent
    B) 8 percent
    C) 5 percent
    D) 3 percent
    Answer: B
    Diff: 1 Type: MC Page Ref: 215
    Skill: Recall
    Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems