Reference no: EM132387887

Economists often refer to the ratio er, where er = ER/DD = (Excess reserves)/(Demand deposits), when they want to quickly assess whether a bank's management style emphasizes safety or profit. Let's arbitrarily say for this question that a safety-oriented bank has an er of 0.7 (70 percent) or higher, and a profit-oriented bank has an er below 0.7.

Compared to the benchmarks given in lecture and in this question itself, the RoA result on its own indicates 1._______ bank, the RoE result on its own indicates 2._________ bank, and the bank management appears to stress 3.___________

1. a healthy or a unhealthy

2. a healthy or a unhealthy

3. profits more than safety or safety more than profits

Fill in the blank. Options are listed as follows with blanks above.