20-97 Which of the following is NOT a criticism of the leverage ratio as a measure of capital?
A) Capital is not required to be held to meet the risks of off-balance-sheet activities.
B) The ratio sends a definitive signal of the level of capital adequacy according to FDICIA.
C) The ratio fails to take into account the different degrees of credit and interest rate risk of the assets.
D) A positive leverage ratio could occur even with a negative economic value of net worth.
E) Answers A and C only.
Correct Answer:
Verified
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