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You are considering buying stock in the following two banks. Each of the banks has assets that are solely long- term corporate bonds. Bank One
You are considering buying stock in the following two banks. Each of the banks has assets that are solely long- term corporate bonds. Bank One is financed by 10% equity and 90% deposits. Bank Two is financed by 25% equity and 75% deposits. Which of the following scenarios would lead to the best outcome for Bank One relative to Bank Two? A recession Higher inflation o Improving corporate credit ratings
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