Question

QUESTION 1 Assuming all positive values, the larger the value of the leverage ratio for a bank, the their equity multiplier will be. larger O smaller QUESTION 2 Assuming a bank has cash reserves to start with, at the moment a depositor comes in and withdraws the deposit they had previously made with the bank, the bank's cash reserves decrease. True False QUESTION 3 Given a one year treasury bond with a face value of $100 and a price of $97.50, what is the implied interest rate? (do not convert to a percentage and round to the nearest thousandth) 0.026 QUESTION 4 Given a 10 year treasury bond with a face value of $100 and a price of $84.50, what is the implied interest rate? (do not convert to a percentage and round to the nearest thousandth) 0.017 QUESTION 5 What is the interest rate on a perpetuity that pays a $1,000 annual coupon payment and costs $25,000? (do not convert to a percentage and round to the nearest thousandth)

Answer 1

1) Answer: larger

The equity multiplier is a financial leverage ratio that measures the portion of the company's assets that are financed by stockholder's equity. It is calculated by dividing a company's total asset value by total shareholders' equity. So, as the leverage ratio increases, the equity multiplier increases as well.