7. The role of capital is to:

a. Increase banks profits

b. Provide a cushion against failure risk

c. Support growth and development of new services

d. Both (b) and (c)

8. Small banks generally carry _____________ surplus as a percent of total equity capital.

a. Less than 25 percent

b. Between 65 to 70 percent

c. Between 45 to 50 percent

d. Between 25 to 30 percent

9. Reason(s) for capital regulation is (are):

a. To limit the risk of bank failures

b. To make sure large institutions invest more in complex derivatives

c. To limit losses to the federal government arising from deposit insurance claims

d. Both (a) and (c)