The Northwest Bank of Charlotte has decided to issue new securities that have five years to maturity that have claims to assets that follow the claims of depositors.What way of meeting their capital needs is the bank taking?

Question

Quizplus · Accepted Answer

The bank is issuing subordinated notes and debentures, as they are securities that have claims to assets that follow the claims of depositors. Issuing common stock or preferred stock involves selling ownership stakes in the bank, while selling assets and leasing facilities would reduce the bank's assets and capabilities. Swapping stock for debt instruments would involve exchanging one form of capital for another, which is not the same as issuing new securities. Therefore, C is the best choice.

The Northwest Bank of Charlotte Has Decided to Issue New