Personal Finance Word of the Day: Stress Test

Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress test. Also known as the Comprehensive Capital Analysis and Review (CCAR), this test is conducted annually by the Federal Reserve.

The Federal Reserve conducts this review to make sure that financial institutions have sufficient capital to continue operating during times of economic and financial stress.

Says the Federal Reserve on its website, “as part of the CCAR, the Federal Reserve evaluates institutions’ capital adequacy, internal capital adequacy assessment processes, and their plans to make capital distributions, such as dividend payments or stock repurchases.”

Click on the video below by Bloomberg for more on the Fed’s stress test.

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