Why do banks need to hold capital? Are there any costs associated with holding a large amount

Question:

Why do banks need to hold capital? Are there any costs associated with holding a large amount of capital?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Markets And Institutions

ISBN: 9781292215006

9th Global Edition

Authors: Stanley Eakins Frederic Mishkin

See More Books

Question Posted: Oct 17, 2023 03:06 AM

See More Questions

Answer Question in 500 words: Taking into account everything Amazon has done on the pharmaceutical side of the healthcare business, is it strategic for Amazon to venture into other sectors of...
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
After pollen lands on a stigma, it is far away from the ovule with the megagametophyte, which holds the egg (the megagamete). How are the two sperm cells transported from the stigma to the egg?
Explain why an auditor is interested in a client's future commitments to purchase raw materials at a fixed price.
In Figure R 1 = 100?, R 2 = 50?, and the ideal batteries have emf s ? 1 = 6.0 V, ? 2 = 5.0 V, and ? 3 = 4.0 V. Find (a) The current in resistor 1, (b) The current in resistor 2, and (c) The potential...
Johann exchanges an apartment building for an office building worth $100,000. The apartment building has an adjusted basis of $80,000 and is encumbered by a $30,000 mortgage, which the owner of the...
Smith Paper, Co., produces the paper used by wallpaper manufacturers. Smiths four-stage process includes mixing, cooking, rolling, and cutting. During September, the Mixing Department started and...
Ivanhoe Industries incurs unit costs of $7 ($4 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 17.800 of the assembly part at $5 per unit. If the...
Analyze the term liability management in the context of retail banking.
For the upcoming week, Nobel National Bank plans to issue $50 million in mortgages and purchase $200 million 31-day T-bills. New deposits of $70 million are expected and other sources will generate...
On average, how much of the energy at one level of the food chain becomes available to the next level? What happens to the rest of the energy?
The revenue recognition principle and the expense recognition principle require that the company recognize related revenue and expense transactions in the same accounting period. Discuss why this...
Revisits scope, time, and cost baselines in the context of agile methodologies. Because agile includes several methodologies (like Scrum, Kanban, Extreme Programming, Feature-Driven Development) we...
Background information and task: Fed officials divided in July over need for more rate hikes, minutes show WASHINGTON, Aug 16 (Reuters) - Federal Reserve officials were divided over the need for more...
Questions: 1. What are the long-term prospects for the Chinese market? 2. Does it make sense for GM to produce automobiles for the Chinese market in China? Why? 3. What do you think would happen if...
The purpose of this assignment is to apply your knowledge of conflict management to a real-world situation so that you can enhance your skills in handling conflicts. It is crucial to carefully read...
At December 31, 2016, Sidestep Corporation reported the stockholders' equity accounts shown here (with dollar amounts in millions, except per-share amounts). Common stock $ 1.00 par value per share,...
Write a paper detailing a geographic information system (GIS) of your own design that would utilize data in an original manner.
Assume that a bank has assets located in Germany worth 150 million earning an average of 8 percent. It also holds 100 in liabilities and pays an average of 6 percent per year. The current spot rate...
Six months ago, Qualitybank issued a $ 100 million, one-year-maturity CD, denominated in British pounds (Euro CD). On the same date, $ 60 million was invested in a -denominated loan and $ 40 million...
Suppose you purchase a 10-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 1,000 Swiss francs (SF). The spot rate is U. S. $ 0.66667 for SF1. At...
help please! Requirement 2. Journalize any required entries from the bank reconciliation. (Record debits first, then credits. Se Begin with the EFT collection, Date Credit Debit Accounts and...
Pear, an individual, plans to start a small business, which will operate as a corporation. In year 0, she expects the corporation to generate an ordinary loss of $1,550,000. Subsequently, she expects...
Daryl Kearns saved $260,000 during the 25 years that he worked for a major corporation. Now he has retired at the age of 50 and has begun to draw a comfortable pension check every month. He wants to...

Why do banks need to hold capital? Are there any costs associated with holding a large amount

Question:

Step by Step Answer:

Banks need to hold capital primarily for safety and stability reasons Capital acts as a cushion that protects a banks depositors and creditors in case ...View the full answer

Financial Markets And Institutions

Students also viewed these Business questions