A bank's net worth is the
A) measure of its proﬁtability.
B) value of its vault cash and loan portfolio.
C) claims of its owners against the bank's assets.
D) claims of its creditors against the bank's assets.

Question

Quizplus · Accepted Answer

A bank's net worth represents the claims of its owners against the bank's assets. It is calculated by subtracting the bank's total liabilities from its total assets. Net worth is also known as shareholder's equity or book value. It is not necessarily a measure of profitability, as a bank can have a high net worth but low profitability or vice versa. The value of the bank's vault cash and loan portfolio are part of its total assets, but not necessarily indicative of its net worth. Claims of creditors against the bank's assets would be a liability and would reduce the net worth.

A Bank's Net Worth Is the