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Banks will be examined at least once a year and given a CAMELS rating by examiners. The
L stands for ____.
A) liabilities
B) liquidity
C) loans
D) leverage
Answer: B
Diff: 1 Type: MC Page Ref: 216
Skill: Recall
Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems
Bank examiners include ____.
A) the Bank of Canada
B) Canada Revenue Agency
C) the OSC
D) the Department of Finance
Answer: A
Diff: 1 Type: MC Page Ref: 216
Skill: Recall
Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems
Banks are required to file ____ usually quarterly that list information on the bank's
assets and liabilities, income and dividends, and so forth.
A) call reports
B) balance reports
C) regulatory sheets
D) examiner updates
Answer: A
Diff: 1 Type: MC Page Ref: 216
Skill: Recall
Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems
Regular bank examinations and restrictions on asset holdings help to indirectly reduce the
____ problem because, given fewer opportunities to take on risk, risk-prone entrepreneurs
will be discouraged from entering the banking industry.
A) moral hazard
B) adverse selection
C) ex post shirking
D) post-contractual opportunism
Answer: B
Diff: 1 Type: MC Page Ref: 216
Skill: Recall
Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems