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    Question

    What is the function of the Capital Adequacy Ratio (CAR)

    in the banking sector?
    A Ensuring customer satisfaction Correct Answer Incorrect Answer
    B Assessing the profitability of banks Correct Answer Incorrect Answer
    C Measuring the bank's capital to its risk Correct Answer Incorrect Answer
    D Regulating foreign exchange rates Correct Answer Incorrect Answer
    E Monitoring branch expansions Correct Answer Incorrect Answer

    Solution

    The Capital Adequacy Ratio (CAR) measures a bank's capital in relation to its risk weighted assets, ensuring that the bank has enough capital to absorb potential losses.

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