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What is bank leverage

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1. What is bank leverage? How is it related to a bank's ROE?

2. Why might the managers of a bank want the bank to be highly leveraged? Why might the bank's shareholders want the bank to be less highly leveraged?

3. Suppose that Bank of America sells $10 million in Treasury bills to PNC Bank. Use T-accounts to show the effect of this transaction on the balance sheet of each bank.

Reference no: EM131304280

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