Early in 2008, Mark-To-Market Accounting Provisions Caused the Banks To

question 2

Multiple Choice

Early in 2008, mark-to-market accounting provisions caused the banks to:

• A)Revalue their portfolio downwards
• B)Be in jeopardy of falling below the regulatory capital requirements
• C)Restrict new loans
• D)All of the above
• E)(a)and (c)only

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Definitions:

Residual Income

The net income an enterprise or project generates above its cost of capital or required rate of return.

Contribution Margin Ratio

A calculation that shows what percentage of sales revenue is available to cover the fixed costs of a business after variable costs have been paid.

Fixed Expenses

Costs that remain constant regardless of any change in a company's activity level, such as lease payments, insurance, and property taxes.

Sales

Represents the total income generated by a company from selling goods or services before any expenses are subtracted.