A Bank with a Leverage Ratio of 9 to 1

question 36

Multiple Choice

A bank with a leverage ratio of 9 to 1 has

• A)$9 in assets for every $1 in liabilities.
• B)$9 in assets for every $1 in capital.
• C)$1 in assets for every $9 in capital.
• D)$1 in assets for every $9 in liabilities.

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Definitions:

Current Liabilities

Current liabilities are a company's debts or obligations due within one year, appearing on the balance sheet and requiring the use of current assets.

Time to Maturity

The remaining lifespan of a debt instrument, indicating the length of time until the principal amount must be repaid.

Dishonored Notes Receivable

A note receivable that has not been paid by the maker at its maturity date, resulting in a failure to meet the financial obligation.

Notes Receivable Account

An account on the balance sheet representing claims against others for money, goods, or services to be paid within a specified period.