A Bank That Has an Equity to Asset Ratio Equal

question 27

Multiple Choice

A bank that has an equity to asset ratio equal to 12 percent can normally lend no more than ________ of its assets to any one borrower.

• A)1.20 percent
• B)1.50 percent
• C)1.80 percent
• D)12.00 percent
• E)15.00 percent

---

Definitions:

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent or salaries.

Net Income

The amount of money left after subtracting all expenses, taxes, and costs from total revenue.

Variable Cost

A cost that varies depending on the level of output or activity, such as materials or labor costs in manufacturing.

Fixed Cost

A periodic cost that does not vary with production volume or sales.