Exam 15: The Management of Capital

The Northwest Bank of Charlotte has decided to issue new securities that have five years to maturity that have claims to assets that follow the claims of depositors.What way of meeting their capital needs is the bank taking?

Under the terms of Basel I,Tier 2 capital includes undivided profits.

A bank has capital to risk-weighted assets of 9.2%,Tier 1 capital to risk-weighted assets of 4.5% and a leverage ratio of 3.7%.What type of bank is this?

For a bank with deficient capital ratios,which of the following actions could be required by regulators to increase the capital ratios,all else constant?

According to recent research,bank stock prices usually drop within a week after a dividend cut is announced.

The ratio of core capital to average total assets is called the:

Under the FDIC Improvement Act of 1991,a U.S.bank possessing a leverage ratio greater than 4 percent would be considered well capitalized.

The fundamental purposes of regulating bank capital cited in the textbook include which of the following?

Credit risk models measure the market risk of a portfolio whose value may decline due to adverse movements in interest rates,stock prices,currency values,or commodity prices.