Question

Which of the following is true of the capital requirement? Check all that apply.
a.It specifies a minimum leverage ratio for all banks.
b.Its intended goal is to protect the interests of those who hold equity in the bank.
c.Its intended goal is to protect the interests of the depositors.

Answer 1

Answer: The correct answers are "b.Its intended goal is to protect the interests of those who hold equity in the bank. " and "c.Its intended goal is to protect the interests of the depositors."

Explanation: Capital requirement that is also sometimes called regulatory capital, is that standard requirement required from banks and other institutions where funds are deposited, a requirement that determines the maximum amount of capital required that the entity must maintain as a proportion of a certain level of assets.

Answer 2

The intended goal of the capital requirement is to protect the interest of those who hold equity in the bank and its intended goal is to protect the interests of the depositors. Therefore, the correct answer is B and C.

Capital requirements refer to the exact amount of capital a bank or other depository institutions must have in line with the requirements of its financial regulator.

Further Explanation

Capital requirements are put in place by the financial regulator to protect the interest of the depositors in case of a market crash, recession or financial crises

Capital requirements are also put in place to make sure that the activities of banks and other financial institutions are dominated by investors.  The capital requirements are also to ensure that banks have the required amount of capital to take care of operating loses while depositors can still be able to withdraw.

Some of the regulatory institutions that set capital requirement include

• Bank for international settlement
• Federal Reserve board
• Federal deposit insurance cooperation

The advantages of capital requirement include:

• It ensures depositors have access to their money.
• It provides measures to evaluate and financial institution
• It ensures that banks and other depository organizations can meet up with their financial obligations.

Some disadvantages of capital requirements include:

• It negatively affect banks’ ability to invests
• It reduces access to credit and loans.

LEARN MORE:

• Which of the following is true of the capital requirement? Check all that apply. brainly.com/question/13789384
• Which of the following is true of the capital requirement? Check all that apply. brainly.com/question/13108033

KEYWORDS:

• capital requirements
• percentage of assets
• equity
• loans
• interest