Refer to the following table when answering
Table 10.2: Hypothetical Bank Sheet ($ millions)
$\begin{array}{lr|lr}
{\text { Column A }} &&{\text { Column B }} \
\hline \text { Loans } & \$ 6,800 & \text { Deposits } & \$ 7,500 \
\text { Investments }&3,700 & \text { Short Term Debt } & 300 \
\begin{array}{l}

\text { Cash \& } \
\text { Reserves }
\end{array} &1,100 & \text { long Term Debt } &1,800 \
\hline
\end{array}$
-Given the information in Table 10.2, what is the approximate leverage ratio of this bank?

Question

Refer to the following table when answering 
Table 10.2: Hypothetical Bank Sheet ($ millions)
 $\begin{array}{lr|lr}
{\text { Column A }} &&{\text { Column B }} \
\hline \text { Loans } & \$ 6,800 & \text { Deposits } & \$ 7,500 \
\text { Investments }&3,700 & \text { Short Term Debt } & 300  \
\begin{array}{l}

\text { Cash \& } \
\text { Reserves }
\end{array} &1,100 & \text { long Term Debt } &1,800 \
\hline
\end{array}$
-Given the information in Table 10.2, what is the approximate leverage ratio of this bank?

Quizplus · Accepted Answer

The leverage ratio is calculated by dividing total assets by total equity. In this case, total assets are $6,800 + $3,700 + $1,100 = $11,600 million. Total equity is not given in the table, so we cannot calculate the leverage ratio exactly. However, we can approximate the leverage ratio by dividing total assets by total liabilities. Total liabilities are $300 + $1,800 = $2,100 million. Therefore, the approximate leverage ratio is $11,600 million / $2,100 million = 4.80.

Refer to the Following Table When Answering Table 10

Refer to the Following Table When Answering
Table 10