The amount of capital that banks are required to hold depends on the:
A) amount of deposits held at a bank.
B) riskiness of the bank's assets.
C) reserve requirements set by the Fed.
D) level of deposit insurance coverage.

Question

Quizplus · Accepted Answer

The riskiness of a bank's assets plays a significant role in determining the amount of capital it is required to hold. Banks that have riskier assets are required to hold a higher amount of capital to ensure they have enough funds available to cover potential losses. The other options (A, C, and D) can have an impact on a bank's overall financial position but are not the main factors that determine the amount of capital required to be held.

The Amount of Capital That Banks Are Required to Hold