For a bank with deficient capital ratios,which of the following actions could be required by regulators to increase the capital ratios,all else constant?
A)Cut the bank's dividend payment.
B)Increase the bank's leverage.
C)Reduce the bank's holdings of cash.
D)Increase the bank's growth rate by making additional commercial loans.
E)Reduce the bank's holdings of Treasury securities.

Question

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Cutting the bank's dividend payment would reduce the amount of money paid out to shareholders and increase the bank's retained earnings, which would increase the bank's capital ratios.

B, C, and D would all decrease the bank's capital ratios. 
Increasing the bank's leverage would increase its risk and reduce its capital ratios. 
Reducing the bank's holdings of cash would decrease its liquidity and potentially increase its risk, which would reduce its capital ratios. 
Increasing the bank's growth rate by making additional commercial loans would increase its risk and reduce its capital ratios. 
Reducing the bank's holdings of Treasury securities would reduce its liquidity and potentially increase its risk, which would reduce its capital ratios.

For a Bank with Deficient Capital Ratios,which of the Following