The CAR requires ADI's to hold capital as a proportion of their risk-adjusted assets.The reasons for this do NOT include:
A) capital contributes to an ADIs financial strength and stability
B) capital reflects a commitment by the owners, as they face the risk of loss
C) capital can sustain solvency when an ADI makes unexpected losses
D) capital represents a reserve of funds that can be drawn on if required
E) because shareholder's face the risk of loss, capital motivates prudent behaviour by an ADI's management.
Correct Answer:
Verified
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A)is required
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A)can be imposed by
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