QUESTION 2a [10 marks]

In corporate finance the leverage ratio can be calculated by dividing capital by book value of assets. How have regulators altered this ratio to determine the capital adequacy requirements for banks or authorized depositor institutions? Compare Gorajek and Turner (2010)[1] analyses to those presented in Lange et al. (2015), Chapter 18. In your discussion consider the tension between the bank and the regulators.

[1] The article by Gorajek and Turner (2010) is located at the end of the test.