Regulators Require a Bank to Hold Some of Its Assets

question 71

Multiple Choice

Regulators require a bank to hold some of its assets as reserves mainly to address:

• A) liquidity risk.
• B) trading risk.
• C) credit risk.
• D) operational risk.

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Definitions:

Activity-Based Costing

A method of accounting that assigns costs to products based on the amount of resources they consume.

Overhead Costs

Expenses related to the operation of a business that are not directly tied to a specific product or service.

Support Activity Costs

Costs incurred by activities that do not directly produce a product or service but are essential to the organization's operation, such as HR and IT.

Support Department Costs

Expenses associated with functions that benefit the entire organization, such as human resources and IT services.