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.
D
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Because transactions deposits can be withdrawn at any time, banks are exposed to
A) credit risk. B) liquidity risk. C) trading risk. D) interest risk.
A corporation's shareholders are its:
a. board of directors. b. residual claimants. c. specialized active managers. d. supervisors.
One basic way to boost the nation's growth rate is to
a. increase wages paid to labor. b. slow the rate of technical progress. c. reduce the population growth rate. d. accumulate more capital
Inflation is an overall:
A. rise in prices in the economy. B. decline in prices in the economy. C. decline in prices in the economy, excluding those with historically volatile price changes. D. rise in prices in the economy, excluding those with historically volatile price changes.