Answer:
6.7
Explanation:
We can calculate the difference between the equity multiplier of Bank A and Bank B by using the equity multiplier formula. The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity.
DATA
Bank A: Equity to asset ratio = 6%
Bank B: Equity to asset ratio = 10%
Bank A
Equity multiplier = total asset / total equity
Equity multiplier = 1.06/0.06
Equity multiplier = 17.67
Bank B
Equity multiplier = total asset / total equity
Equity multiplier = 1.10/0.1
Equity multiplier =11
Difference = 17.67-11
Difference = 6.7
