I frequently see debt leverage ratios for banks, etc. Sometimes these are 12:1, 15:1, etc.
My question is, does this ratio mean that for every $1 a bank has, it loans $15? And if so, where does a bank get the extra $14 to loan out.
My question is, does this ratio mean that for every $1 a bank has, it loans $15? And if so, where does a bank get the extra $14 to loan out.
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