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A bank has capital of $200 and a leverage ratio of 5. If the value of the bank's assets declines by 10 percent, then its capital will be reduced to g

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abiolataiwo2015

Answer:

$100

Explanation:

Calculation for what the capital will be reduced to

First step is to calculate the Declined in capital

Declined in capital=5*10%

Declined in capital=50%

Second step is to calculate what the capital will be reduced to

Reduction in capital=$200*50%

Reduction in capital=$100

Therefore the capital will be reduced to $100

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