FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Assets
Liabilities and Owners' Equity
Reserves
$200
Deposits
$1,600
Loans
$800
Debt
$250
Securities
$1,000
Capital (owners' equity)
$150
Suppose a new customer adds $100 to his account at Midwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new
loans. This would increase the loans account and
v the
▼ account.
This would also bring the leverage ratio from its initial value of
V to a new value of
Which of the following is true of the capital requirement? Check all that apply.
O It specifies a minimum leverage ratio for all banks.
O Its intended goal is to protect the interests of those who hold equity in the bank.
O Its intended goal is to protect the interests of the depositors.
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Transcribed Image Text:Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at Midwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and v the ▼ account. This would also bring the leverage ratio from its initial value of V to a new value of Which of the following is true of the capital requirement? Check all that apply. O It specifies a minimum leverage ratio for all banks. O Its intended goal is to protect the interests of those who hold equity in the bank. O Its intended goal is to protect the interests of the depositors.
Bank's Balance Sheet
Assets
Liabilities and Owners' Equity
Reserves
$200
Deposits
$1,600
Loans
$800
Debt
$250
Securities
$1,000
Capital (owners' equity)
$150
Suppose a new customer adds $100 to his account at Midwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new
loans. This would increase the loans account and
the
▼ account.
This would also bring the leverage ratio from its initial value of
to
new value of
Which of the following is true of the capital requirement? Check all that apply.
O It specifies a minimum leverage ratio for all banks.
O Its intended goal is to protect the interests of those who hold equity in the bank.
expand button
Transcribed Image Text:Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at Midwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the ▼ account. This would also bring the leverage ratio from its initial value of to new value of Which of the following is true of the capital requirement? Check all that apply. O It specifies a minimum leverage ratio for all banks. O Its intended goal is to protect the interests of those who hold equity in the bank.
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