Bank XYZ can withstand a 2% drop in asset value and still be “well capitalized”.

Question

Bank XYZ can withstand a 2% drop in asset value and still be “well capitalized”. Well capitalized means an Equity/Asset ratio of 8%.

True

False

1.    Base your answers to the following question on the latest 10-K filed by Dime Community Bancshares (ticker symbol DCOM)

The FDIC does not regulate bank liquidity on credit risk.

True

False

1.    One of the responsibilities of the Federal Reserve System of the United States is to balance federal tax receipts and Federal expenditures.

True

False

1.    One of the responsibilities of the central bank of the United States is to maintain the stability of the financial system and containing systemic risk that may arise in financial markets.

True

False

Explanation / Answer

1. It is true that Bank XYZ can withstand a 2% drop in asset value and still be “well capitalized”. Well capitalized means an Equity/Asset ratio of 8%.

2. It is true that the FDIC does not regulate bank liquidity on credit risk.

3. It is false that one of the responsibilities of the Federal Reserve System of the United States is to balance federal tax receipts and Federal expenditures.

4. It is true that one of the responsibilities of the central bank of the United States is to maintain the stability of the financial system and containing systemic risk that may arise in financial markets.

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