If a Bank Has a Leverage Ratio of 0

question 43

Multiple Choice

If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity?

• A)0)2%
• B)2)1%
• C)5%
• D)20%

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Definitions:

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved.

Competitive Level

The point where an entity can effectively compete in the market, usually by matching or surpassing competitors' offerings.

Consumer Surplus

The gap between the total price consumers are ready and able to pay for a good or service versus what they actually spend.

Producer Surplus

The difference between the amount a producer is willing to accept for a good or service versus what they actually receive, usually resulting from market prices above minimum selling prices.