One Way for Bank Regulators to Assure Depositors That a Bank

question 2

Multiple Choice

One way for bank regulators to assure depositors that a bank is not taking on too much risk is to require the bank to

• A) diversify its loan portfolio.
• B) reduce its equity capital.
• C) reduce the size of its loan portfolio.
• D) do both A and B of the above.
• E) do both B and C of the above.

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Definitions:

Depressants

Substances that reduce the activity of the central nervous system, often used to induce calmness or sleep.

Stimulants

Substances that increase alertness, attention, and energy by elevating the heart rate, blood pressure, and respiration.

Double-Blind Procedure

An experimental procedure in which neither the participants nor the experimenters know who is receiving a particular treatment, used to prevent bias in research results.

Placebo

An inert or non-active treatment given to a participant in an experiment, used to measure the effect of the treatment being tested.