Assets: $200 Reserves; $5000 Short term Bonds; $6000 Long Term Loans Liabilities: $7000 Checkable Deposits; $3000 Fixed...
Assets: $200 Reserves; $5000 Short term Bonds; $6000 Long Term Loans
Liabilities: $7000 Checkable Deposits; $3000 Fixed Rate Borrowings; $1200 Capital
If market interest rates fall by 2%, how will bank profits change?
Homework Answers
Total interest-earning assets = Short term bonds + Long term loans = 5000 + 6000 = 11000
Total interest-paying liabilities = Checkable Deposits + Fixed rate borrowings = 7000 + 3000 = 10000
Since Total interest-earning assets > Total interest-paying liabilities, lower interest rate will decrease profit.
Decrease in profit = (Total interest-earning assets - Total interest-paying liabilities) x 2%
= (11000 - 10000) x 2%
= 1000 x 2%
= 20
Add Answer to:
Assets: $200 Reserves; $5000 Short term Bonds; $6000
Long Term Loans
Liabilities: $7000 Checkable Deposits; $3000 Fixed...
Assets: $200 Reserves; $5000 Short term Bonds; $6000 Long Term Loans Liabilities: $7000 Checkable Deposits; $3000 Fixed...
Assets: $200 Reserves; $5000 Short term Bonds; $6000 Long Term Loans Liabilities: $7000 Checkable Deposits; $3000 Fixed Rate Borrowings; $1200 Capital What is the Gap for this bank and what does it measure? What (be specific) could the bank do to create a gap of zero?
Rate-Sensitive Bank Assets Liabilities $5 Variable-rate Loans Short-term Loans Short-term Securities Reserves Variable-rate CDs Money Market...
Rate-Sensitive Bank Assets Liabilities $5 Variable-rate Loans Short-term Loans Short-term Securities Reserves Variable-rate CDs Money Market Deposit Accounts Checkable Deposits Savings Deposits Long-term CDs Equity Capital Long-term Loans Long-term Securities 30 30 Referring to the table above, and using basic gap analysis, this bank's "gap" is $ million. (Round your response to the nearest whole number.) Referring to the table above, if interest rates suddenly increase by two percentage points, then the bank's profits change by $ whole number.) (Round...
A bank has the following assets: $80 in Reserves, 5350 in Bonds, $550 in Loans.
A bank has the following assets: $80 in Reserves, 5350 in Bonds, $550 in Loans. It has the following Liabilities: $600 in Checkable Deposits, $200 Borrowings The bank experiences an outflow of deposits of $50. The bank takes a loan from the Fed to meet the reserve requirement of 10%. If the bank take the minimum amount necessary, what is the new level of borrowings?
Assets Liabilities + Net Worth Reserves $120,000 Checkable Deposits $300,000 Loans 140,000 Stock Shares 200,000 Securities...
Assets Liabilities + Net Worth Reserves $120,000 Checkable Deposits $300,000 Loans 140,000 Stock Shares 200,000 Securities 40,000 Property 200,000 The accompanying balance sheet is for the First Federal Bank. Assume the required reserve ratio is 20 percent. If the original bank balance sheet was for the whole commercial banking system rather than a single bank, loans and deposits could have been expanded by a maximum of: $40,000. $100,000. $200,000. $300,000.
Period 1 Liabilities £m Assets Deposits 75 Securities LT Borrowings 15 ST Loans Equity 10 LT...
Period 1 Liabilities £m Assets Deposits 75 Securities LT Borrowings 15 ST Loans Equity 10 LT loans Fixed assets Total liabilities 100 Total assets 100 Period 2 Liabilities £m Assets £m Deposits Securities LT Borrowings 15 ST Loans Equity 10 LT loans Fixed assets Total liabilities 100 Total assets 100 Assume the following interest rates: Deposits @ 3.5%. Long-term borrowings @ 4%. Securities @ 4.5%. Short-term loans @ 5.5%. Long-term loans @ 9.5%. [i] Compute the interest received, interest expense,...
Bank A Assets Liabilities & Net Worth Reserves $20 Deposits $120 Bonds $10 Borrowing $40 Loans...
Bank A Assets Liabilities & Net Worth Reserves $20 Deposits $120 Bonds $10 Borrowing $40 Loans $230 Net Worth $100 Bank B Assets Liabilities & Net Worth Reserves $10 Deposits $150 Bonds $30 Borrowing $20 Loans $260 Net Worth $130 Suppose that there are only two banks in the United States (so that all the banking rules and regulations pertain to the U.S.). The tables above show the balance sheets of these two banks at a point in time. The...
Consider a bank with the following balance sheet: Assets Liabilities Required Reserves $ 8 million Checkable...
Consider a bank with the following balance sheet: Assets Liabilities Required Reserves $ 8 million Checkable Deposits $100 million Excess Reserves $ 3 million Bank Capital $ 6 million T-bills $45 million Commercial Loans $50 million Calculate the bank’s risk-weighted assets.
The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio...
The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Using balance sheet A, how would this look. How much excess reserves currently exist for the bank? Households deposit $5000 in currency into the bank that is added to reserves. (Show this addition on the balance sheet A. What level of excess reserves does the bank now have? Assuming the excess reserves become loans, what would this look like on the...
Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given...
Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given its deposits of $3,000, the bank is required to hold $ 360 as reserves. (Enter your response as an integer.) The bank holds excess reserves of $ 90. (Enter your response as an integer.) The bank can increase its loans by $ 750 . (Round your response to two decimal places.) Suppose a depositor comes to the bank and withdraws $200 in cash. Show...
te Assets Liabilities Deposits 1000 Loans Bonds Reserves 700 100 200 Your banking system, shown above,...
te Assets Liabilities Deposits 1000 Loans Bonds Reserves 700 100 200 Your banking system, shown above, has no excess reserves. What is the value of the deposit expansion multiplier? Select one: O a. 7 O b. 10 o O c.5 o d. 4
Rate-Sensitive Bank Assets Liabilities $5 Variable-rate Loans Short-term Loans Short-term Securities Reserves Variable-rate CDs Money Market Deposit Accounts Checkable Deposits Savings Deposits Long-term CDs Equity Capital Long-term Loans Long-term Securities 30 30 Referring to the table above, and using basic gap analysis, this bank's "gap" is $ million. (Round your response to the nearest whole number.) Referring to the table above, if interest rates suddenly increase by two percentage points, then the bank's profits change by $ whole number.) (Round...
Period 1 Liabilities £m Assets Deposits 75 Securities LT Borrowings 15 ST Loans Equity 10 LT loans Fixed assets Total liabilities 100 Total assets 100 Period 2 Liabilities £m Assets £m Deposits Securities LT Borrowings 15 ST Loans Equity 10 LT loans Fixed assets Total liabilities 100 Total assets 100 Assume the following interest rates: Deposits @ 3.5%. Long-term borrowings @ 4%. Securities @ 4.5%. Short-term loans @ 5.5%. Long-term loans @ 9.5%. [i] Compute the interest received, interest expense,...
Bank A Assets Liabilities & Net Worth Reserves $20 Deposits $120 Bonds $10 Borrowing $40 Loans $230 Net Worth $100 Bank B Assets Liabilities & Net Worth Reserves $10 Deposits $150 Bonds $30 Borrowing $20 Loans $260 Net Worth $130 Suppose that there are only two banks in the United States (so that all the banking rules and regulations pertain to the U.S.). The tables above show the balance sheets of these two banks at a point in time. The...
Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given its deposits of $3,000, the bank is required to hold $ 360 as reserves. (Enter your response as an integer.) The bank holds excess reserves of $ 90. (Enter your response as an integer.) The bank can increase its loans by $ 750 . (Round your response to two decimal places.) Suppose a depositor comes to the bank and withdraws $200 in cash. Show...
te Assets Liabilities Deposits 1000 Loans Bonds Reserves 700 100 200 Your banking system, shown above, has no excess reserves. What is the value of the deposit expansion multiplier? Select one: O a. 7 O b. 10 o O c.5 o d. 4
Most questions answered within 3 hours.
-
The pH of a sample of water from a river is 5.0. A
sample of effluent from...
asked 7 minutes ago -
At the beginning of the period, the Fabricating Department
budgeted direct labor of $136,500 and equipment...
asked 34 minutes ago -
Please answer all
____ 28. Rent control is usually
justified on the grounds that it protects...
asked 34 minutes ago -
PARTS A-D HAVE BEEN ANSWERED. WAS TOLD TO REPOST. ONLY ANSWER
PARTS E and F.
A...
asked 52 minutes ago -
2) You are given the task of finding a representation for a
circle in a drawing...
asked 1 hour ago -
STUDY QUESTION: Does use of diet drug fen-phen
(fenfluramine-phentermine) cause valvular heart disease?
HINT: Valvular heart...
asked 1 hour ago -
1. An object weighing 40 N rests on a surface. The coefficient
of friction is 0.35....
asked 3 hours ago -
Investor company owns 35% of investee company voting stock and
accounts for the investment under the...
asked 4 hours ago -
The number of major faults on a randomly chosen 1 km stretch of
highway has a...
asked 4 hours ago -
Consider the competitive environment of Starbuck's, Progressive
Insurance, a manufacturing firm with low turnover, or a...
asked 5 hours ago -
3. Gains from trade
Consider two neighbouring island countries called Euphoria and
Contente. They each have...
asked 7 hours ago -
A business executive has the option to invest money in two
plans: Plan A guarantees that...
asked 9 hours ago