A bank has (in millions): $200 reserves,$800 loans,$400 securities,$1200 deposits,$100 debt,and $200 capital.How much is the bank's leverage ratio?

Question

Quizplus · Accepted Answer

The leverage ratio is calculated as the ratio of total assets to capital. The bank's total assets are $200 (reserves) + $800 (loans) + $400 (securities) = $1400 million. The capital is $200 million. Therefore, the leverage ratio is $1400 / $200 = 7.

A Bank Has (In Millions): $200 Reserves,$800 Loans,$400 Securities,$1200 Deposits,$100