Suppose a bank is operating with a leverage ratio of 20 . What is the maximum decrease in the market value of assets before the bank becomes insolvent?
A leverage ratio of 20 implies each percentage change in assets results in a 20% change in capital. Therefore, a 5% decrease in the market value of assets will result a 100% decrease in capital. This results in a situation of insolvency - bank capital will be zero.
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Cold Creek Credit Union has liabilities of $450,000 and net worth of $175,000. Cold Creek Credit Union's assets are
A. $175,000. B. $275,000. C. $450,000. D. $625,000.
Which type of price discrimination results in the highest profits for firms?
A. First-degree price discrimination B. Second-degree price discrimination C. Third-degree price discrimination D. Regular price discrimination
Historically, the U.S. government seems to have ________
A) run budget surpluses as often as budget deficits B) generally spent less than what it collected in taxes each year C) had difficulty running budget surpluses D) not needed to borrow to finance wars E) none of the above
Added expenditures in the circular flow that are not paid for out of domestic resource income are known as
a. leakages. b. injections. c. imports. d. infusions.