The Following Three FIs Dominate a Local Market and Their

question 47

Multiple Choice

The following three FIs dominate a local market and their total assets are given below.
$\begin{array}{lccc} \text {Institution }& \text { Asset Size}\\ \text {Bank A}&\$ 50 \text { million}\\ \text {Bank B}& \$ 60 \text { million}\\ \text {Bank C}&\$ 90 \text { million}\\\end{array}$
Under the 1982 guidelines,would the Fed approve the merger of Banks A and C?

• A)It is likely to approve because it is not a concentrated market.
• B)It is unlikely to approve because the post-merger HHI has increased by over 100.
• C)It is likely to approve because the post-merger HHI has increased by over 100.
• D)Likely to approve because the post-merger HHI has increased by less than 5,000.

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Definitions:

AASB 2

An accounting standard that specifies the financial reporting requirements for entities to reflect the effects of transactions involving share-based payment transactions.

Equity Instruments

Financial instruments that represent ownership in a company, such as stocks, giving holders a claim on the company's residual assets and earnings.

Remuneration Expense

The total cost incurred by an organization for the payment of salaries, wages, and other forms of employee compensation.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.