As a bank approaches insolvency,it is likely to

Question

Quizplus · Accepted Answer

As a bank approaches insolvency, it is likely to decrease its lending activities (option A) in a bid to conserve capital and reduce risks. Additionally, it may find that its capital is declining (option C) due to increased loan losses and write-offs. Therefore, options A and C are correct, making choice E the best answer. The other options (B and D) are not practical because they involve increasing lending activities and liabilities, which would exacerbate the bank's financial problems.

As a Bank Approaches Insolvency,it Is Likely to