Asked by Nyiah Smith on Jul 22, 2024

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In the banking industry,the ratio of invested capital/gross assets,as defined by RAP,is the

A) capital asset ratio.
B) capital adequacy ratio.
C) gross asset ratio.
D) indirect capital ratio.

Capital Adequacy Ratio

A measure of a bank's capital, used to protect depositors and promote stability and efficiency in financial systems.

Invested Capital

Represents the total amount of money that shareholders and debt holders have invested in a company.

Gross Assets

The total value of all assets owned by an entity before deducting any liabilities or depreciation.

  • Review the role of regulatory frameworks in shaping financial communication and company practices.
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Verified Answer

CP
Christelle PagonisJul 22, 2024
Final Answer :
B
Explanation :
The ratio of invested capital to gross assets is known as the capital adequacy ratio (CAR) in the banking industry. This ratio is used to determine whether a bank has sufficient capital to absorb unexpected losses and maintain solvency. A higher CAR indicates that the bank has more capital to support its operations and is considered to be more financially stable. Therefore, B is the best choice.