Capital Requirements for Banks Do NOT Serve the Purpose Of

question 34

Multiple Choice

Capital requirements for banks do NOT serve the purpose of:

• A) reducing a bank owner's incentive for excessive risk taking.
• B) offsetting the change in incentives caused by deposit insurance.
• C) putting to use the excess of a bank's assets over its deposits and other liabilities.
• D) reducing deposits.

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Definitions:

Good Faith

Good Faith refers to an honest intention to act without taking an unfair advantage over another party, often assumed in the context of negotiations or business dealings.

Liability

A financial obligation or debt that an individual or company owes.

Advisors

Experienced professionals who provide expert advice and guidance in specific areas of business, finance, or other fields to individuals or organizations.

Skeptical

Doubtful or questioning, often requiring evidence before believing in the truth or effectiveness of something.