Question

Issues of subordinated debt have been a popular way of raising funds for banks. Which of...

Issues of subordinated debt have been a popular way of raising funds for banks. Which of the following is a significant reason for this?

Multiple Choice

a. Subordinated debt ranks ahead of all other liabilities of the issuer.

b. Subordinated debt ranks ahead of debentures.

c. Subordinated debt is an attractive, secure investment.

d. Banks are allowed to include subordinated debt as capital for regulatory purposes.

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Answer #1

Banks are allowed to include subordinated debt as capital for regulatory purposes.

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