a. Cash reserves = 10% of deposits = 20000
b. Net worth = assets – liabilities = 250000 – 200000 = 50000
c. Equity multiplier = Assets / equity = 250000 / 50000 = 5
d. Interest received = 10000$
Return on assets = interest / total assets * 100 = 10000 / 250000 * 100 = 4%
e. Interest received = 10000 $
Return on equity = interest received / equity * 100 = 10000 / 50000 * 100 = 20%
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,...
The T-account below represents assets and liabilities for a bank. Use the T-account to calculate the bank's net worth. Liabilities + Net Worth Deposits Assets Loans $17 million U.S. Government Securities (USGS) $8 million Reserves $1 million $12 million Net Worth ? Provide your answer below: million
The T-account below represents assets and liabilities for a bank. Use the T-account to calculate the bank's net worth. Express your answer in millions $9 million Assets Liabilities + Net Worth Loans $8 million Deposits U.S. Government Securities (USGS) $2 million Reserves $1 million Net Worth Provide your answer below: million
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...
The balance sheet for ACME Bank is shown below. ACME Bank Balance Sheet 1 Assets Liabilities and net worth Reserves $ 107,500 Checkable $ 120,000 deposits Loans $ 28,500 Stock shares $ 290,000 Property $ 274,000 Suppose the bank decides to invest 40 percent of its excess reserves in short-term securities in order to earn interest. The bank issues a cashier's check to a securities dealer to purchase the securities. The securities dealer deposits the check into an account at...
The balance sheet for ACME Bank is shown below. ACME Bank Balance Sheet 1 Assets Liabilities and net worth Checkable deposits $ Reserves 69,500 97,000 $ 42,500 Stock shares $ Loans 220,000 $ 205,000 Property Suppose the bank decides to invest 80 percent of its excess reserves in short-term securities in order to earn interest. The bank issues a cashier's check to a securities dealer to purchase the securities. The securities dealer deposits the check into an account at a...
4. Suppose that a bank has the following balance sheet (market values, USD billions) Assets Liabilities Cash o 50 Deposits 870 Corporate loans (oox 650 Long-term debt Secured mortgage 200 loans T-bills, 20.0, 50 Common stock 25 (a) What is the value of the bank's risk-weighted assets? What is the bank's Tier 1 capital? What is the bank's total regulatory capital? (6 marks) (b) Does the bank satisfy the capital ratios imposed by the BaselI accord? (4 marks) (e) Can...
C. Consider the following bank balance sheet Freedom Bank Assets Liabilities Reserves $1200 Deposits $9000 Loans $8000 Debt $800 Securities $800 Net Equity 1. What is the net equity of this bank? 2. What is Freedom Bank's leverage ratio? 3. What does the number you got from C2 mean in plain words? What does it mean for the safety of the bank? 4. What is the bank's reserve ratio?
Consider the balance sheet for the Wahoo bank as presented below. Wahoo Bank Balance Sheet Assets Liabilities government securities $1,600 Liabilities: Checking accounts $4,000 Required Reserves $400 Net Worth $1,000 Excess Reserves $0 Loans $3,000 Total Assets $5,000 Total Liabilities $5,000 Using a required reserve ratio of 10% and assuming that the bank keeps no excess reserves, write the changes to the balance sheet for each of the following scenarios: Bennett withdraws $500 from his checking account. The Fed buys...
(6 points) 3. The bank you own has the following balance sheet Liabilities with current interest rate Assets with current interest rate $5million $20 million Variable: 1% Checking Fixed: 0% Reserves deposits Savings Deposits $25 million Fixed: 2% $10 million Variable: 2% Government Securities Variable: 3 % $10 million Money Market Deposit Accounts $35 million Fixed: 6% Mortgage Loans Bank Capital To be To be $10 million Variable: 7% Short-Term determined determined Loans Business $20 million Fixed: 9% Loans $80...