-Refer to Exhibit 12-1.If Bank ABC's assets rise by 5 percent and its liabilities rise by 3 percent,by what percentage would its bank capital change compared to its original bank capital (i.e.compared to the value originally in blank (A) ) ?

Question

​
  ​
-Refer to Exhibit 12-1.If Bank ABC's assets rise by 5 percent and its liabilities rise by 3 percent,by what percentage would its bank capital change compared to its original bank capital (i.e.compared to the value originally in blank (A))?

Quizplus · Accepted Answer

Bank capital changes based on the difference in the percentage change of assets and liabilities, not directly by the percentage changes themselves. If assets increase by 5% and liabilities by 3%, the difference (2%) affects the equity proportionally more because equity is a smaller base compared to assets. The calculation is not straightforward from the information given; it requires understanding that the leverage effect amplifies the percentage change in equity.

​ ​-Refer to Exhibit 12-1.If Bank ABC's Assets Rise by 5

-Refer to Exhibit 12-1.If Bank ABC's Assets Rise by 5