A bank has capital of $200 and a leverage ratio of 5. If the value of the

Question:

A bank has capital of $200 and a leverage ratio of 5. If the value of the bank’s assets declines by 10 percent, then its capital will be reduced to
a. $100.
b. $150.
c. $180.
d. $185.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Essentials Of Economics

ISBN: 9780357723166

10th Edition

Authors: N. Gregory Mankiw

See More Books

Question Posted: Feb 26, 2024 03:01 AM

See More Questions

Multiple Choice Questions 1. The money supply includes all of the following EXCEPT a. Metal coins. b. Paper currency. c. Lines of credit accessible with credit cards. d. Bank balances accessible with...
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
Himanshu Patel, a resident taxpayer aged 59, runs a sole trading business selling imported food items. His business is registered for GST. He also works on a casual basis as an import/export agent at...
Obesity (BMI 30) is a serious problem in the United States and expected to get worse. Being overweight increases the risk of diabetes, heart disease, and many other ailments. The table gives the...
Based on the information available and Ruizs expectations regarding exchange rates, if the hryvnia is chosen as the Ukraine subsidiarys functional currency, Eurexim will most likely report: A. an...
What are some of the limitations of the traditional HR metrics?
Oak Industries, a manufacturer of radio and cable TV equipment and an operator of subscription TV systems, had a multitude of problems. Subscription services in a market area, for which $ 12 million...
What are 3 potential client comtrols over handing errors in suppliers invocies?
The classical principle of monetary neutrality states that changes in the money supply do not influence ________ variables, and it is thought to be most applicable in the ________ run. a. nominal;...
If the reserve ratio is and the central bank increases the quantity of reserves in the banking system by $120, the money supply increases by a. $90. b. $150. c. $160. d. $480.
What are the pros and cons for investors to stage their financial commitments?
In the 2014 race for the governor of Illinois, the state vote was as follows: Was there a majority winner in this election, and if so, who was it? B. Rauner P. Quinn C. Grimm TOTAL: 1,781,052...
A focus group of 33 people for $A B C T V$ were asked to rank the government spending priorities of education $(\mathrm{E})$, military spending $(\mathrm{M})$, health care $(\mathrm{H})$,...
The city district attorney has 60 litigators to be divided among three courts. The following table shows the schedule of the number of pending cases for each court. Court: Pending cases: A 209 B 769...
In 1988 the 94th International Olympic Committee (IOC) met in Seoul to select the 1994 Winter Olympics site. The cities in the running were Anchorage (A), Lillehammer (L), Ostersund (T), and Sofia...
Packard-Hue manufactures testing equipment at four locations, and has just hired 300 new employees. Those employees are to be apportioned using production levels at the four locations according to...
From the information in the trial balance presented above, prepare a balance sheet for Juanitas Delivery Service as of September 30, 20--.
How do network effects help Facebook fend off smaller social-networking rivals? Could an online retailer doing half as much business compete on an equal footing with Amazon in terms of costs? Explain.
How does the number of firms in an oligopoly affect the outcome in its market?
What is the prisoners dilemma, and what does it have to do with oligopoly?
Give two examples other than oligopoly that show how the prisoners dilemma helps to explain behavior.
1 . A fin is attached to a 2 0 cm diameter circular pipe that carries hot water at a temperature of 8 0 \ deg C . The fin is made of aluminum and has a length of 3 0 cm and a thickness of 2 mm . The...
A round compression member with both ends pinned and made of AISI 1020 cold-drawn steel is to be used in a machine. Its diameter is 25 mm, and its length is 950 mm. What maximum load can the member...
You are an A&P employed by a U.S. airline whose maintenance personnel are represented by a union and working under a union contract with the company. You dislike unions, don't want to be a union...

A bank has capital of $200 and a leverage ratio of 5. If the value of the

Question:

Step by Step Answer:

The leverage ratio of a bank is defined as the ratio of its total assets to i...View the full answer

Essentials Of Economics

Students also viewed these Business questions