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Question
Carson County State Bank has a ratio of equity capital to total assets of 2.5%. The regulators have asked all banks of similar size to maintain a capital adequacy ratio of 8%. They are making the bank issue new stock in the market. In addition, they are not allowing the bank to issue dividends to their current stockholders. Which type of risk would this be an example of?
A. Operational risk
B. Legal risk
C. Compliance risk
D. Strategic risk
E. Reputation risk
Answer
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