If a bank is failing short of meeting its capital requirements by $1 m

QUESTION

If a bank is failing short of meeting its capital requirements by $1 million, what three things can it do to rectify the situation?

to cover the short fall of $1 million. When a bank will issue the common stock it will receive the cash from those who will buy its stock and the funds collected will be treated as the capital of the bank, next thing is to reduce the amount of dividend. If the bank will pay less amount of dividend to its shareholders than its retained earnings account balance will increase which in turn will help in fulfilling the requirement of $1 million in full or part. Last is lending less money, if a bank will lend lesser money than in such case it will have more money lying its end and that money can be used to fulfill this gap of $1 million.

1) Issuing common stock

ANSWER:

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