The Following Are Protective Mechanisms That Have Been Developed by Regulators

question 69

Multiple Choice

The following are protective mechanisms that have been developed by regulators to promote the safety and soundness of the banking system EXCEPT

• A)encouraging banks to rely more on deposits rather than debt or capital as a cushion against failure.
• B)encouraging banks to limit lending to a single customer to no more than 10% of capital.
• C)the provision of deposit insurance.
• D)the periodic monitoring of banks.
• E)encouraging banks to produce timely accounting statements and reports.

---

Definitions:

Impairment Loss

A reduction in the recoverable amount of a fixed asset or goodwill below its carrying amount recorded on the balance sheet.

Input Market

The marketplace where resources or raw materials that a company uses to produce its products are bought and sold.

Long-lived Assets

Assets that are expected to provide economic benefits over a period of time longer than one fiscal year.

Cumulative Weighted Average Expenditure

The sum of all expenditures over a period weighted by the time each amount was incurred, providing a means to calculate average costs or investments over that period.