Homework answers / question archive / During the latest financial tsunami in March 2009 (and November 2008),if investors believe the financial institution has to make a 10% loss provision for the asset it is holding

During the latest financial tsunami in March 2009 (and November 2008),if investors believe the financial institution has to make a 10% loss provision for the asset it is holding

Economics

Share With

During the latest financial tsunami in March 2009 (and November 2008),if investors believe the financial institution has to make a 10% loss provision for the asset it is holding. How can we use the relationship between the return on assets, the return on capital and the asset-capital leverage for banks and financial institutions to discuss the effect the loss provision on the financial institution's capital and share price? Will the share price drop to zero?