In general, a bank defines its value-at-risk as the estimated potential loss fro

Question

In general, a bank defines its value-at-risk as the estimated potential loss from its traditional businesses that could result from adverse movements in market prices.

Question 17 options:

b) False

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When a bank holds a lower level of capital, a given dollar level of profits represents a lower return on equity.

Question 18 options:

b) False

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Banks A and B have the same net income. Bank A has a higher capital ratio and more assets than B. Bank A's return on assets is ____ than Bank B's. Bank A's return on equity is ____ than Bank B's.

Question 20 options:

higher; higher

higher; lower

lower; higher

lower; lower

a) True

b) False

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When a bank holds a lower level of capital, a given dollar level of profits represents a lower return on equity.

Question 18 options:

a) True

b) False

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Banks A and B have the same net income. Bank A has a higher capital ratio and more assets than B. Bank A's return on assets is ____ than Bank B's. Bank A's return on equity is ____ than Bank B's.

Question 20 options:

a)

higher; higher

b)

higher; lower

c)

lower; higher

d)

lower; lower

Explanation / Answer

17. a) True

18. b) False

20. d) Lower;Lower

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