How Is the Leverage Ratio Calculated

question 1

Multiple Choice

How is the leverage ratio calculated?

• A)Total debt divided by total assets.
• B)Total assets divided by total debt.
• C)Average total assets divided by average common stockholders' equity.
• D)Average total debt divided by average total assets.

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Definitions:

Reserve Requirement Ratio

The reserve requirement ratio is the fraction of deposits that banks are required to keep on hand as reserves, determined by the central bank.

Money Supply

The accrued sum of money resources in an economy at a particular moment, covering cash, coins, and the capital in checking and savings accounts.

Reserve Requirement

The minimum amount of reserves that banks must hold against deposits, as mandated by central banking authorities.

Money Supply

The all-encompassing amount of economic monetary assets at a designated time.