A Bank with a Leverage Ratio of 6

question 50

Multiple Choice

A bank with a leverage ratio of 6.5 to 1 has

• A)$6.50 in assets for every $1 in liabilities.
• B)$6.50 in assets for every $1 in capital.
• C)$1 in assets for every $6.50 in capital.
• D)$1 in assets for every $6.50 in liabilities.

---

Definitions:

Inputs

The resources used in the production process to produce goods or services, including labor, materials, and capital.

Output

The amount of goods or services produced by a person, machine, factory, or entire economy in a certain period.

Returns To Scale

A concept in economics that describes how the output of a production process changes as the scale of production inputs changes.

Production Function

A mathematical model that describes the relationship between inputs used in production and the resultant output.