Consider two banks: Bank A and Bank B.Suppose the value of liabilities of both the banks is equal.However,Bank A is solvent,while Bank B is insolvent.This would imply that ________.

Question

Quizplus · Accepted Answer

The fact that Bank A is solvent and Bank B is insolvent means that Bank A has sufficient assets to cover its liabilities while Bank B does not. Therefore, Bank A's assets must be greater than its liabilities while Bank B's liabilities exceed its assets. Since the value of liabilities is equal for both banks, this implies that Bank A's assets exceed Bank B's assets.

Consider Two Banks: Bank a and Bank B