20-76 Each of the Following Is a Function of Capital

question 26

Multiple Choice

20-76 Each of the following is a function of capital EXCEPT

• A)funding the branch and other real investments to provide financial services.
• B)protecting the insurance fund and the taxpayers.
• C)assuring the highest possible return on equity for the shareholders.
• D)protecting uninsured depositors in the event of insolvency and liquidation.
• E)absorbing losses in a manner that allows the FI to continue as a going concern.

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Definitions:

Payback Periods

The amount of time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Investments

Items or resources purchased with the intention of earning income or increasing in value as time goes on.

Short Payback Period

A time frame in which an investment is expected to be recovered quickly, indicating potential attractiveness.

Revenue

The cumulative earnings generated by a business from sales of products or offering of services over a designated period.