Suppose Fictional Third bank holds an asset portfolio of $200 billion with average duration of 3....
Suppose Fictional Third bank holds an asset portfolio of $200 billion with average duration of 3. Liabilities at Fictional Third bank total $180 billion and have an average duration of 1. What is the value of capital at Fictional First? Answer in billions of dollars and do not enter a $ sign.
Homework Answers
Assets of Fictional Third bank = $200 billion
Liabilities of Fictional Third bank = $180 billion
Calculate the capital of Fictional Third bank -
Assets of Fictional Third Bank = Liabilities of Fictional Third Bank + Capital of Fictional Third Bank
Capital of Fictional Third Bank = Assets of Fictional Third Bank - Liabilities of Fictional Third Bank
Capital of Fictional Third Bank = $200 billion - $180 billion = $20 billion
The value of capital at Fictional Third Banks is $20 billion.
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