6. Banking Suppose Bank B has a T-account table as follow: Loan: Securities: Reserve Cash: Assets...

Question

Question

6. Banking Suppose Bank B has a T-account table as follow: Loan: Securities: Reserve Cash: Assets $34,000 $7,800 $5,100 Depos

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

a. Equity = Asset - Liabilities

(34,000 + 7,800 + 5,100) - (40,000 + 2,500) => 4,400

b. Equity Multiplier = Total Assets / Equity

=> (34,000 + 7,800 + 5,100) / 4,400 => 10.66

c. Return on Equity = 6,000 / 4,400 => 136.4%

d. Return on Asset = 6,000 / (34,000 + 7,800 + 5,100)

=> 12.8%

Please Upvote and Support!!

Add a comment

Answer 2

Similar Homework Help Questions

6. Banking Suppose Bank B has a T-account table as follow: Loan: Securities: Reserve Cash: Assets...

6. Banking Suppose Bank B has a T-account table as follow: Loan: Securities: Reserve Cash: Assets $34,000 $7,800 $5,100 Deposit: Borrowing: Liability + Equity $40,000 $2,500 Equity: a) What is the equity? b) What is the equity multiplier? c) If the bank earns $6000 from their investments, including loans and securities, what is the ROE (return on Equity)? What about ROA (return on assets)?
4. Suppose a bank currently has the following T-Account (all values in USD) : Assets Liabilities...

4. Suppose a bank currently has the following T-Account (all values in USD) : Assets Liabilities + Net worth Loans 210,000 Deposits Government Securities 20,000 Cash Reserves ? Net worth 200,000 ? a. Assuming required reserves of 10% are met exactly by this bank, how much are their cash reserves? b. Assuming required reserves of 10% are met exactly by this bank, how much is its net worth? c. What is the bank's equity multiplier? d. If, in the next...
4. Suppose a bank currently has the following T-Account (all values in USD) : Assets Liabilities...

4. Suppose a bank currently has the following T-Account (all values in USD) : Assets Liabilities + Net worth Loans 210,000 Deposits Government Securities 20,000 Cash Reserves ? Net worth 200,000 a. Assuming required reserves of 10% are met exactly by this bank, how much are their cash reserves? b. Assuming required reserves of 10% are met exactly by this bank, how much is its net worth? C. What is the bank's equity multiplier? d. If, in the next year,...

A commercial bank’s T-account in 2018 is shown as below Assets Loans: $800 Securities: $100 Reserves:...

A commercial bank’s T-account in 2018 is shown as below Assets Loans: $800 Securities: $100 Reserves: $60 Liabilities plus equity Deposits: $900 Borrowing: $0 Equity: ? The bank pays 10% for the bank deposit to the depositors; the average interest rate on the loans is 15%; the returns to its securities is 10%; and the interest rate earned from the reserves is 4% . 1. Calculate the value of equity, the value of capital ratio and the leverage ratio? 2....
Let’s consider two banks with identical balance sheets Bank A Assets &nbs

Let’s consider two banks with identical balance sheets Bank A Assets Liabilities (unit in million) Reserves $10 Checkable deposits $100 Securities 30 Loans 80 Bank capital 20 Bank B Assets Liabilities (unit in million) Reserves $10 Checkable deposits $85 Securities 30 Loans 80 Bank capital 35 a) Assume ROA= 1%, the same for both banks. Calculate Equity ratio (ER) for Bank A and B, respectively. How about the return on...
just question e please 10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (...

just question e please 10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (owners' equity). Bank One has $3,000 securities. What are the reserves and loans? a. Draw the bank balance sheet with reserves, deposits, loans, securities and capital. b. What is the total amount of reserves? 12,000X. 25: 13,000 c. What is the total amount of loans? 15.000- 3,000-3000 54.000 d. What is the leverage ratio? 15,000/3,000 - 5 e. If $500...

the required reserve ratio is 12% 4. Suppose that the T-account for First National Bank is...

the required reserve ratio is 12% 4. Suppose that the T-account for First National Bank is as follows: Assets (thousands) Reserves Loan Total Liabilities (thousands) Deposit SR 500 SR 100 SR 400 SR 500 SR 500 a. If National Commercial Bank decides to reduce its reserves to only the required amount, will the economy's money supply increase or decrease, by how much it will increase or decrease? Explain. b. What is the money multiplier in this economy?
Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves...

Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves +10M Deposits +100M Government Bonds £20M Loans Ł80M Bank Capital +10M a. Suppose interest rate on loans and government bonds is 10%, interest rate on deposits is 8%, and interest rate on excess reserves is 0%. What is the Bank's net return on assets? Compute the return on equity. b. Suppose the risk weights imposed by the bank regulator on loans, securities, and reserves...
Megalopolis Bank has the following balance sheet and income statement Assets Cash and due from banks...

Megalopolis Bank has the following balance sheet and income statement Assets Cash and due from banks Investment securities Repurchase agreements Loans Fixed assets Other assets Balance Sheet (in millions) Liabilities and Equity $ 10,000 Demand deposits 33,000 NOW accounts 52,000 Retail CDs 100.000 Debentures 25,000 Total liabilities 5,000 Common stock Paid-in capital Retained earnings $225,000 Total liabilities and equity $ 29,000 99,000 38.000 29,000 $195,000 12,000 4,000 14,000 $225,000 Total assets Income Statement Interest on fees and loans Interest on...

Assets Reserves at the Fed 1.2 million Checkable Deposits 0.3 million Saving Deposits 15 million Time...

Assets Reserves at the Fed 1.2 million Checkable Deposits 0.3 million Saving Deposits 15 million Time Deposits 6 million Federal Funds leans$ 25 millon Bank Copital 56 million 7.5 million $8.5 million milion $3 milhon Loans Securities eeral Pun loan C Calculate Bank of the Coyote's leverage ratio Suppose the Bank of the Cayote earned $0.8 million in after-tax proits Calculate the ROA for Bank of the Coyote cCalculate Bank of the Coyote's ROE 5. For each of the itens...

6. Banking Suppose Bank B has a T-account table as follow: Loan: Securities: Reserve Cash: Assets...

Homework Answers