Which Statute Initiated Risk-Based Deposit Premiums

question 78

Multiple Choice

Which statute initiated risk-based deposit premiums?

• A)the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)
• B)the Depository Institutions Deregulation and Monetary Control Act (DIDMCA)
• C)the Federal Deposit Insurance Corporation Improvement Act (FDICIA)
• D)the McFadden Act

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Definitions:

New Equity

Refers to the issuance of shares by a company to raise capital, which dilutes existing ownership but can provide funds for expansion or debt reduction.

Constant Growth

A steady and unchanging rate at which the value or size of something increases over a specific period.

Flotation Costs

The total costs incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Cost of Equity

The return a company theoretically pays to its equity investors as a reward for taking on the risk of investing in the company.