–Three ratios commonly used are: Core Deposits/Assets (core deposits to total assets), Loans/Deposits (Loans to deposits), and Loan Commitments/Assets (loan commitments to assets).
–Answer these questions on 1 page (double-spaced):
1. Discuss how peer group ratio comparison works.
2. Discuss the purpose of each ratio and how each ratio is related to liquidity risk.
–What’s the difference between core deposits and deposits?
3. What does each ratio say about how likely a bank is to rely on borrowed funds?
•*Do not plagiarize from the textbook, use your own words. See pages 633-634. You may use other sources as long as you cite them.