Which of the Following Are Problems in Using the Leverage

question 33

Multiple Choice

Which of the following are problems in using the leverage ratio as a measure of capital adequacy?

• A)Even with a low leverage ratio, an FI could have a negative market value net worth.
• B)The different types of risks, such as credit or interest rate risk are not captured.
• C)Off-balance-sheet activities are not captured.
• D)Even with a low leverage ratio, an FI could have a negative market value net worth, the different types of risks, such as credit or interest rate risk are not captured and off-balance-sheet activities are not captured.

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