278 $
© 2014 Pearson Canada Inc.$
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
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
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
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