The Bank Is Considering Changing Its Asset Mix by Moving

question 131

Multiple Choice

The bank is considering changing its asset mix by moving $100 million of commercial loans into Treasury securities.If it does change the asset mix and capital remains the same, the risk-based capital ratio

• A)will not change because the total assets have not changed.
• B)will decrease because the earnings rate on Treasuries is less than on loans.
• C)will increase by 16.67 percent.
• D)will increase because the assets will have less risk.
• E)will change, but the direction cannot be determined with the information given.

---

Definitions:

Continental Conditions

The environmental, climatic, and geologic conditions that prevail on continental landmasses.

Bases of Power

The sources of power individuals or groups possess in a social or organizational structure, such as coercive, reward, legitimate, expert, and referent power.

Reward Power

The ability to influence others through the promise of rewards or benefits, often used in a leadership or management context.

Procedural Power

The influence or authority derived from an individual's ability to control the process, methods, or order in which decisions are made or tasks are executed.