QUESTION 8

Which of the following statements is CORRECT?

	A.	At any time, a bank can reclassify an investment security to become an available-for-sale security.
	B.	At any time, a bank can reclassify an available-for-sale security to become an investment/held-to-maturity security.
	C.	Securities can only be reclassified during exceptional events such as the GFC.
	D.	If allowed, it would be advantageous for banks to reclassify a trading security to held-to-maturity security during a period of rising prices.
	E.	None of the above statements are correct.

QUESTION 9

Ordinary shares on issue are good quality capital because __________________________.

	A.	they can decrease when an asset is written off.
	B.	shareholders are required to provide additional funds to the bank when the bank makes a loss.
	C.	the bank has no commitment to pay dividends and can boost retained profits instead.
	D.	they have brought funds to the bank.
	E.	they use the credit rating of the bank.