Final answer:
The fraction of a firm's assets financed with liabilities is calculated by dividing the total liabilities by the total assets. In this case, the firm's assets are funded by liabilities up to approximately 231%.
Step-by-step explanation:
To determine what fraction of a firm's assets it finances with liabilities, we need to compare the firm's liabilities to its total assets.
From the information provided, the firm has assets totaling reserves of 30, bonds of 50, and loans of 50, summing up to 130.
The liabilities are deposits of 300 plus equity of 30, making liabilities total to 330. However, equity is not considered a liability, so to find the portion financed by liabilities, we only look at the deposits.
The fraction of assets financed by liabilities is 300 (deposits) divided by the total assets of 130, giving us a fraction of approximately 2.31, or 231% (which indicates that the firm is heavily leveraged).