onsider a bank with the following balance sheet: Assets-150 Liabilities-110 Capital-40 a) What is this bank’s leverage ratio? A. 0.27 B. 0.36 C. 2.75 D. 3.75 E. 13.63 b) Suppose that the bank’s assets earn 3% interest and the bank’s liabilities pay 2% interest, what is the bank’s expected profit per unit of capital? A. 0.01 or 1% B. 0.0336 or 3.36% C. 0.0575 or 5.75% D. 0.2667 or 26.67% E. 0.3636 or 36.36%
onsider a bank with the following balance sheet: Assets-150 Liabilities-110 Capital-40 a) What is this bank’s leverage ratio? A. 0.27 B. 0.36 C. 2.75 D. 3.75 E. 13.63 b) Suppose that the bank’s assets earn 3% interest and the bank’s liabilities pay 2% interest, what is the bank’s expected profit per unit of capital? A. 0.01 or 1% B. 0.0336 or 3.36% C. 0.0575 or 5.75% D. 0.2667 or 26.67% E. 0.3636 or 36.36%
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
Section: Chapter Questions
Problem 4CQQ
Related questions
Question
V1
Consider a bank with the following balance sheet:
Assets-150
Liabilities-110
Capital-40
a) What is this bank’s leverage ratio?
A. 0.27
B. 0.36
C. 2.75
D. 3.75
E. 13.63
b) Suppose that the bank’s assets earn 3% interest and the bank’s liabilities pay 2% interest, what is the
bank’s expected profit per unit of capital?
A. 0.01 or 1%
B. 0.0336 or 3.36%
C. 0.0575 or 5.75%
D. 0.2667 or 26.67%
E. 0.3636 or 36.36%
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