Shareholders and Managers of Banks May Prefer That Banks Be

question 44

True/False

Shareholders and managers of banks may prefer that banks be required to hold higher levels of capital because this would allow for higher share prices for the banks and larger bonuses for bank managers.

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Definitions:

Securities and Exchange Commission

A U.S. federal agency responsible for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry.

1933 Securities Act

A federal statute that requires securities sold in the U.S. to be registered and to disclose relevant financial information, aiming to protect investors from fraud.

General Solicitation

The act of publicly advertising or promoting an investment opportunity, often regulated by securities law to protect investors.

Noninvestment Company

An entity primarily engaged in operations other than investing, reinvesting, or trading in securities and does not qualify as an investment company under relevant regulations.