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.
1 answer:
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Answer:
See the explanation below
Explanation:
The pressure is defined as the product of the density of the liquid by the gravitational acceleration by the height, and can be easily calculated by means of the following equation.
where:
Ro = density of the fluid [kg/m³]
g = gravity acceleration = 9.81 [m/s²]
h = elevation [m]
In this way we can understand that the greater pressure is achieved by means of the height of the liquid, that is, as long as the fluid has more height, greater pressure will be achieved at the bottom.
Therefore in order of decreasing will be
The largest pressure with the largest height of the liquid, container B. The next is obtained with container D, the next with container A and the lowest pressure with container C.
The pressure decreases as we go from the container B - D - A - C