A bank that is 'critically undercapitalized':
A)faces no significant regulatory restrictions.
B)can only grant loan to highly leveraged borrowers.
C)cannot avoid seizure in all circumstances.
D)will be placed into conservatorship or receivership if its capital level is not increased within a certain time limit.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

A bank that is "critically undercapitalized" is considered to be in extremely poor financial health, and as such faces stringent regulatory restrictions. If its capital levels are not increased within a prescribed timeframe, the bank will be placed into receivership or conservatorship. Therefore, option D is the correct answer.

A Bank That Is 'Critically Undercapitalized