Question

1. Why don’t banks hold more capital than they do? 2. What are some of the...

1. Why don’t banks hold more capital than they do?

2. What are some of the problems with using the book value of capital?

3. What determines the market-to-book ratio (difference between market and book values) of capital?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Basel III new capital requirements. The theory is that this capital should be able to absorb big losses, if banks run into trouble. The International Basel III accord forces banks are hold unto to more high quality capital at all times.

2. Do not have an idea about that answer

3. Market value: The market value is the value of the company according to the financial markets. The market value of a company is calculated by multiplying current stock price by the number of outstanding share that are trading in the market.

Book value:The book value of the stock is theoretically the amount of money that would be paid to the shareholders of the company was liquidated and paid off its all liabilities.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain why banks hold more cash than do most businesses.
Explain why banks hold more cash than do most businesses.
1.) Small banks A. act more competitively than large banks. B. usually charge more on loans...
1.) Small banks A. act more competitively than large banks. B. usually charge more on loans relative to what is paid to depositors compared to large banks. C. are generally more efficient than large banks. D. are growing in number. 2.) Which of the following best describes the current banking system in the United States? A. The market is dominated by 10 large banks and there are very few small banks operating any more. B. There are more than 10,000...
Why do we apply risk weights when analysing capital adequacy? Why don’t we simply add all...
Why do we apply risk weights when analysing capital adequacy? Why don’t we simply add all assets? Discuss. Also, discuss what banks are likely to do if risk weights were abolished.
Why do we apply risk weights when analysing capital adequacy? Why don’t we simply add all...
Why do we apply risk weights when analysing capital adequacy? Why don’t we simply add all assets? Discuss. Also, Discuss what banks are likely to do if risk weights were abolished.
Why market value is more important than book value? Select one: a. Manager is responsible to...
Why market value is more important than book value? Select one: a. Manager is responsible to increase the market value b. Book value is more important than market value c. All are true d. Market value provide the real value of firm’s asset e. Market value determines firm’s ability to pay their debt
1- Why does someone with emphysema breathe more rapidly than a healthy person? 2- How do...
1- Why does someone with emphysema breathe more rapidly than a healthy person? 2- How do meiosis and mitosis look different? What are the examples? 3- What is the difference between dominant and recessive alleles? 4- How do lifestyle factors contribute to chronic disease? Try to share your answers as a comic strip.
1. Explain why economic value added (EVA) includes more than just profits. 2. What is the...
1. Explain why economic value added (EVA) includes more than just profits. 2. What is the difference between data and information? Why is the distinction important?
Suppose that the required reserve ratio is 8% (i.e. rr = RR/D = 0.08), banks hold...
Suppose that the required reserve ratio is 8% (i.e. rr = RR/D = 0.08), banks hold 5% of checking account deposits as excess reserves (i.e. e = ER/D = 0.05), and the currency-to-deposit ratio is 0.5 (i.e. c = C/D = 0.5).      a.   Use this information to calculate the money multiplier.      b.   How would your answers to part (a) change if banks become concerned about risks             involved in making loans and now choose to hold 20% of...
1) Why might the mercury spectrum have more lines than the hydrogen spectrum? 2) Why might...
1) Why might the mercury spectrum have more lines than the hydrogen spectrum? 2) Why might the mercury spectrum have more lines than the hydrogen spectrum? 3) For these emission spectra, why are some lines more intense than other lines?
1. What are margins and broker's role with them? 2. what did the banks do to...
1. What are margins and broker's role with them? 2. what did the banks do to try to stop the market collapse and what happened?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT