Secure https:/newconnect Chapter 12 Connect Help Save& Exit 16 The financial cri

Question

Secure https:/newconnect Chapter 12 Connect Help Save& Exit 16 The financial crisls compelled banks to reduce their leverage sharply. bank before and after the financial crisis. Consider the following two views of the balance sheet of a 10 Assets Reserves $30 other borroved funds 390 erne Celculate the leverage ratios for each view Instructions: Enter your responses rounded to View 1: Leverage ratio View 2: Leverage ratio- Which balance sheet view is more likely to be that of the bank after the financial crisis? two decimal places O View 1 View 2 C Prev 16 of 16 Next commond

Explanation / Answer

View 1: Leverage Ratio = 90/110 = 0.82

View 2: Leverage Ratio = 600/90 = 6.67

After the crisis View 1 is the leverage ratio.

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