If a Bank Has Assets of $5 Billion and Liabilities

question 32

Multiple Choice

If a bank has assets of $5 billion and liabilities of $4.8 billion:

• A) its equity equals $200 million.
• B) its equity equals -$800 million.
• C) it faces a solvency crisis.
• D) its equity equals -$800 million and it faces a solvency crisis.

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Definitions:

Recent Month

The latest completed month period for which data or details are considered or analyzed, typically in a financial or operational context.

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in no profit or loss.

Unit and Dollars

Refers to the measure of financial and physical quantities in terms of units (number of items) and their monetary value in dollars.

Monthly Net Operating Income

Net operating income calculated on a monthly basis, indicating the profitability of business operations within that month.