A bank that has an equity to asset ratio equal to 12 percent can normally lend no more than ________ of its assets to any one borrower.

Name: A bank that has an equity to asset ratio equal to 12 percent can normally lend no more than ________ of its assets to any one borrower.
Brand: Quizplus
Rating: 4.7 (56 reviews)

Question

Quizplus · Accepted Answer

The legal lending limit for a bank is calculated as 15 percent of its capital. The capital-to-asset ratio is 12 percent, thus the legal lending limit is 0.12 × 15 =1.80 percent.

A Bank That Has an Equity to Asset Ratio Equal