Response to the following questions:
1. Why is the market value of equity a better measure of a bank's ability to absorb losses than book value of equity?
2. How is the leverage ratio for a bank defined?
3. What is the significance of prompt corrective action as specified by the FDICIA legislation?
4. Identify and discuss the weaknesses of the leverage ratio as a measure of capital adequacy.
If possible, please give examples to better understand your response.