What Does a High Proportion of Brokered Deposits Indicate

question 31

Multiple Choice

What does a high proportion of brokered deposits indicate?

• A)Total risk-based capital ratio of the DI is less than 10 percent.
• B)Above average risk, and thus an increased potential for failure.
• C)Less informed savers are protected against a reduction in wealth.
• D)Reduced insolvency risk as brokered deposits are covered under deposit insurance.
• E)Lower levels of credit risk.

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Definitions:

Payable

Short-term financial obligations or debts of a company, typically to suppliers, that are due to be paid within one year.

Cash Dividend

A payment made by a company out of its profits to shareholders, usually in the form of cash.

Dividends Payable

A liability on a company's balance sheet representing the amount of declared dividends that are owed to shareholders but not yet paid.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends.