Question
Tupac ins analyzing the capital and liquidity requirements faced by the following two large banks. Bank A: this bank has limited leverage compared to other
Tupac ins analyzing the capital and liquidity requirements faced by the following two large banks.
Bank A: this bank has limited leverage compared to other banks and a high ratio of equity to total assets or equity to risk-weighted assets (RWA). At the same time, this bank has a low share of cash or equivalent assets on its balance sheet.
Bank B: this bank has high leverage relative to other banks and a low ratio of equity to total assets or equity to risk-weighted assets (RWA). On the other hand, this bank has a high share of cash or equivalent assets on its balance sheet.
In this context, which of the statements below is correct?
Group of answer choices
Bank B is more likely to satisfy capital requirements. Bank A is more likely to satisfy liquidity requirements.
Bank A is more likely to satisfy capital requirements. Bank B is more likely to satisfy liquidity requirements.
Bank A is more likely to satisfy both capital and liquidity requirements.
Bank B is more likely to satisfy both capital and liquidity requirements.
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