Capital at start of planning period = $248 Asset at start of planning period = $2,720 Dividend ratio = 50% Asset growth rate = 10% ROA = 1%
If the bank’s capital target for next period is 8.5%, which of the following statements is TRUE?

Question

Capital at start of planning period = $248 Asset at start of planning period = $2,720   Dividend ratio = 50% Asset growth rate = 10% ROA = 1% 
 If the bank’s capital target for next period is 8.5%, which of the following statements is TRUE?

Answer

The bank’s projected capital ratio is in line with the capital target.

Answer

The bank is projected to have a capital excess next period; it can meet its capital target by increasing the dividend payout ratio.

Answer

The bank is projected to have a capital excess next period; it can meet its capital target by reducing the dividend payout ratio.

Answer

The bank is projected to have a capital shortage next period; it can meet its capital target by reducing the dividend payout ratio.

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Capital at start of planning period = $248 Asset at start of planning period = $...

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