Consider the Following T-Account for a Bank If the Required Reserve Ratio Is 10 Percent,the Bank at Assets

question 17

True/False

Consider the following T-account for a bank:
$\begin{array}{|l|l|}\hline {\text { Assets }} & {\text { Liabilities }} \\\hline \text { Reserves } \$ 1,000 & \text { Deposits } \$ 5,000 \\\hline \text { Loans } \$ 4,000 & \\\hline\end{array}$
If the required reserve ratio is 10 percent,the bank at this point can make no more loans.

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Definitions:

Liquidity Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets.

Profitability Ratio

A financial metric used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Solvency Ratio

A financial metric used to measure a company's ability to meet its long-term debts and financial obligations.

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing the current market price of a stock by its earnings per share.