Answer:
Suppose the owner of the bank borrow $100 to increase their existing reserves. This would increase the loans accounts and increase the debt account.
Leverage ratio:
By using the formula the leverage ratio is calculated as follows:
Leverage ratio = Total asset / capital
= (200 + 800 + 1000) / 150
= 13.33
Hence, the initial leverage ratio is 13.33
After the owner borrow $100 the leverage ratio will be
Leverage ratio = ((200 + 100) + 800 + 1000) /150
= 14
Hence, the new leverage ratio is 14
Hence the Change value is from 13.33 to 14
From the given, Statement 3 is correct.
“Its intended goal is to protect the interest of the depositors”
9. Bank leverage Use the information presented in Southwestern Mutual Bank's balance sheet to answer the...
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