Business, 05.05.2020 05:18 caity2006

Suppose a bank’s loan portfolio suffers a large number credit downgrades, increasing risk-weighted assets (RWA). Which of the following approaches would help the bank meet its new (increased) regulatory capital requirements?

a. Increase Tier 1 capital by paying out dividends.
b. Increase Tier 2 capital by issuing more subordinated debt or preferred stock.
c. Purchase treasury securities to reduce the overall riskiness of its loan portfolio.
d. Increase Tier 2 capital by issuing senior secured debt.

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Suppose a bank’s loan portfolio suffers a large number credit downgrades, increasing risk-weighted a...