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August 20, 2014

Homework Help: Economics

Posted by Alvin on Tuesday, June 12, 2012 at 2:32pm.

Bank A has a leverage ratio of 10, while Bank B has a leverage ratio of 20. Similar losses on bank loans at the two banks cause the value of their assets to fall by 7 percent. Which bank shows a larger change in bank capital? Does either bank remain solvent? Explain.

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