Exam 12: Capital Management

The Basle Agreement was between the U.S, England, and Japan -- no other countries signed the agreement.

Banks anticipating a takeover by another bank may repurchase some outstanding equity to decrease this takeover threat.

Bank equity includes surplus and undivided profits on the balance sheet.

Regulatory forebearance means that regulators bear the losses of failed banks.

Agency costs in banking arise due to conflicts of interest between:

Risk-based capital requirements employ:

Losses on defaulted loans that were anticipated decrease the current earnings of the bank.

Under Basel I, the risk weight for commercial loans under the new risk-based capital requirements is:

Regulatory costs of compliance cause bank values to:

Market risk capital requirements concern the valuation of real estate assets.

Uniform capital requirements in the early 1980s tended to motivate banks to increase their off-balance-sheet activities.

When bank earnings declined in the 1980's, bankers decreased capital ratios in order to:

Because new capital rules generally have lower weights on securities than loans, There is the possibility that:

Tier 1 capital does NOT include which of the following?

Banks' long-term debt is subordinated to which of the following items?

Which of the following factors causes the issuance of long-term debt to be more costly for small banks than large banks?

From the viewpoint of bank shareholders, what is(are) the advantage(s) of using debt to finance assets?

In 1981 federal bank regulators moved to a uniform bank capital requirement that focused On:

Increased use of debt, holding all else the same, causes the variability of EPS to:

In a depositor payoff of a failed bank by the FDIC, the failed bank is merged with a healthy bank.