Note: the Residential Mortgages All Have a Loan-To-Value of Between

question 36

Multiple Choice

$\begin{array}{lccc} \text {Cash and Treasury securities}& \text { \$ 100 million}\\ \text { FedFunds Sold }& \text { \$ 100 million}\\ \text { Resiclential Mortgages 1-4 family}& \text { \$ 200 million}\\ \text {Commercial Loans }& \text { \$ 600 million}\\\end{array}$
Note: The residential mortgages all have a loan-to-value of between 60 and 80 percent.
If the bank has capital of $50 million,what is the leverage ratio using the standardized approach?

• A)5.00 percent.
• B)8.33 percent.
• C)25.0 percent.
• D)50.0 percent.

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Definitions:

Gross Profit Method

An inventory estimation technique that calculates the cost of goods sold and ending inventory by using the gross profit margin.