19-32 Requiring higher capital ratios often is proposed as method to reduce the incentive to take excessive risk because the moral-hazard risk-taking incentives are thought to decrease as the amount of net worth increases.

Question

Quizplus · Accepted Answer

Requiring higher capital ratios is proposed as a method to reduce the incentive to take excessive risk because the moral-hazard risk-taking incentives decrease as the amount of net worth increases. Thus the statement is true.

19-32 Requiring Higher Capital Ratios Often Is Proposed as Method