Regulatory Capital Arbitrage Is a Means of

question 35

Multiple Choice

Regulatory capital arbitrage is a means of

• A)using borrowed funds to increase the returns that can be earned with a given amount of capital.
• B)specifying the amount of capital that financial institutions should hold based on the riskiness of their different assets.
• C)determining mortgage rates for sub-prime borrowers.
• D)changing the composition of assets in such a way as to lower the overall amount of capital a financial institution holds for a given level of assets.

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Definitions:

Coercive Power

The ability to influence others' actions through threats, punishment, or other forms of pressure.

General Decline

A widespread decrease or deterioration over time.

Leaders

Individuals who guide or direct a group towards a goal, often inspiring and influencing the behavior of others.

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Information and insights directly applicable and critical to the completion or understanding of a specific job or task.