A Bank with a Leverage Ratio of 9 to 1

question 36

Multiple Choice

A bank with a leverage ratio of 9 to 1 has

• A)$9 in assets for every $1 in liabilities.
• B)$9 in assets for every $1 in capital.
• C)$1 in assets for every $9 in capital.
• D)$1 in assets for every $9 in liabilities.

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Definitions:

Asset Retirement

The process of removing a long-term asset from the company's balance sheet once it is taken out of service, including the associated removal costs.

Public Welfare

Government efforts and programs designed to support the well-being of the population, including health care, education, and social services.

Double-Declining Balance

A method of accelerated depreciation where an asset's value decreases at double the rate of traditional straight-line depreciation.

Salvage Value

The estimated amount that an asset is expected to realize at the end of its useful life.