A Deficiency of the Risk-Based Capital Ratio Is That It

question 35

True/False

A deficiency of the risk-based capital ratio is that it measures the ability of a bank to meet both the on- and off-balance-sheet credit risk, but not interest rate risk and market risks.

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Definitions:

Subsidized Loans

Loans where the government pays the interest while the borrower is in school, during grace periods, or during deferment periods.

Unsubsidized Loans

Loans where the borrower is responsible for the interest during all periods, starting from the time the loan is disbursed.

Debit Card

A card that directly subtracts funds from a buyer's checking account to finance a purchase.

Credit Card

A payment card issued by a financial institution that allows the cardholder to borrow funds with the promise to repay, with interest, at a later date.