Which of the following statements is false?

Question

BlackTom AI · Accepted Answer

Let's examine each statement to identify which one is false.

Option a: The major downside of managed investment funds is the fees that investors must pay. This is generally true in many contexts, as management fees, expense ratios, and other costs can erode returns, which is a common criticism of actively managed funds and some mutual funds.

Option b: Regulators cannot impose liquidity requirements on financial institutions. In reality, regulators do have tools to impose liquidity requirements, such as liquidity coverage ratios and other stress-testing or buffer requirements for banks and other financial institutions. Therefore, this statement is false because it contradicts established regulatory practice.

Option c: Under the regulatory rules, the amount of capital a bank must hold reflects the composition of its assets. This is true in many regulatory frameworks: different asset types carry different risk weights, and capital requirements adjust to asset risk and composition to safeguard solvency.

Option d: Only licensed banks are permitted to use the term 'bank' in their name. This is generally true in many jurisdictions where legal recognition and licensing govern naming rights, preventing non-banks from using the term in their branding to avoid consumer confusion.

In summary, while options a, c, and d align with common financial regulation concepts, option b conflicts with the reality that regulators can and do impose liquidity requirements on financial institutions.

MCD2170 - T3 - 2025 Week 10 post class homework

Which of the following statements is false?

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MCD2170 - T3 - 2025 Week 10 post class homework

Which of the following statements is false?

View Explanation

Log in for full answers

Similar Questions

Countries around the world adopt bank regulation broadly consistent with the framework issued by the Basel Committee because

The net regulatory burden on financial institutions refers to:

The supervisory and regulatory activities of each Federal Reserve Bank in its district includes the authority to do which of the following?

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The Federal Reserve Bank has primary responsibility for the supervision and regulation of

Nationally chartered banks ("National Banks") are those chartered through the

In the area of bank supervision, which of the following are functions of the Federal Reserve Banks? Examinations of state member banks Approval of member bank and bank holding company acquisitions Deposit insurance

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Each Federal Reserve Bank has supervisory and regulatory authority over the activities of Blank and Blank located in their districts.