A Bank with a Leverage Ratio of 6

question 50

Multiple Choice

A bank with a leverage ratio of 6.5 to 1 has

• A)$6.50 in assets for every $1 in liabilities.
• B)$6.50 in assets for every $1 in capital.
• C)$1 in assets for every $6.50 in capital.
• D)$1 in assets for every $6.50 in liabilities.

---

Definitions:

Financial Transaction

A financial transaction refers to an agreement, or communication between a buyer and seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.

Unearned Revenue

Income received by an entity for services yet to be rendered or goods yet to be delivered; also known as deferred revenue.

Liability

Any type of financial debt or obligation that a company or individual owes to another party.

Products Or Services

The outcomes of a business process or activity, which include tangible goods and intangible deliveries provided to meet customer needs.