What is the leverage implied by the bank balance sheet listed below?
?
Assets
?
?
Liabilities & Net Worth
?
Reserves
$19,000,000
?
Checking Deposits
$20,000,000
Loans Outstanding
$2,000,000
?
?
?
Total
$21,000,000
?
Net Worth
?
?
?
?
Stockholders’ Equity
$1,000,000
?
?
?
Total
$21,000,000
A. 10-to-1
B. 12-to-1
C. 20-to-1
D. 21-to-1
Answer: D
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