Question
A Bank has a capital of 1 million Dollars, Deposits of 5 million Dollars and a debt of 2 million dollars on the liability and
A Bank has a capital of 1 million Dollars, Deposits of 5 million Dollars and a debt of 2 million dollars on the liability and owners equity side. On the Assets side, the bank has reserves of 2 million dollars, loans of 3 million dollars and securities of 3 million dollars.
Estimate the banks leverage ratio =_______________________. The leverage ratio means that for every dollar of capital that the bank owner has contributed, the bank has _$_______ of assets. Of the _$______ assets, $________ are financed with borrowed money either by taking in deposits or issuing debt.
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