Homework Answers
(i) Assets:
- Bonds
- Loans
- Reserves
(ii) Liabilities:
- Deposits
(iii) Neither:
- Operating expenses
- Income from ATM
[Income and expenses belong to income statement, not in balance sheet as assets or liabilities]
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Determine if the items listed should be classified in a bank's T-chart as an asset, a...
Part 2: Problems 1. The are shown below average durations and dollar amounts of assets and liabilities held in International Bank Asset and Liability Items Avg.Duration yrs) Amount Investment Gra...
Part 2: Problems 1. The are shown below average durations and dollar amounts of assets and liabilities held in International Bank Asset and Liability Items Avg.Duration yrs) Amount Investment Grade Bonds Commercial Loans Consumer Loans Deposits Nondeposit Borrowings $80.00 $500.00 $220.00 $600.00 2.00 5.00 8.00 1.0 $400.00 10 What is the weighted average duration of International Bank's asset portfolio? What is the weighted average duration of International Bank's liability portfolio? What is the leverage-adjusted duration gap? (1.5 point)
Part 2:...
Assignment Determine the proper category for the listed items. Category Options: 1. Interest Income 2. Interest...
Assignment Determine the proper category for the listed items. Category Options: 1. Interest Income 2. Interest Expense 3. Non-Interest Income 4. Non-Interest Expense o Items: Interest paid on time deposits Interest paid on CD's Interest received on US Treasury Securities Fees received on mortgage loan originations Dividends paid to shareholders Provision for loan los Interest earned on loans Interest earned on municipal bonds Employee salaries Purchase of new computer system Service charge receipts from customer accounts Rent paid on bank...
BIG Bank's balance sheet is listed below. Market yieilds and duratons (in years) are in parenthesis,...
BIG Bank's balance sheet is listed below. Market yieilds and duratons (in years) are in parenthesis, and amounts are in millions. Assets Cash Interbank lending (1.5%, 0.05) T-bonds (7.50%, 8) $20 Demand deposits $200 | Savings accounts (4.5%, 0.50) $100 | Interbank borrowings (1.5%, $400 | Wholesale funding (5.5%, Llablitles and equlty $300 $200 $200 $400 0.01) Consumer loans (696, 2.50) 0.25) Business loans (5.8%, 10) $380 Equity $400 $400 Variable-rate mortgages repriced at quarter (6.3%, 0.25) Due to turbulence...
Question B6. (15 marks) BIG Bank's balance sheet is listed below. Market yields and durations (in...
Question B6. (15 marks) BIG Bank's balance sheet is listed below. Market yields and durations (in years) are in parenthesis, and amounts are in millions. Assets Cash Interbank lending (1.5%, 0.05) T-bonds (7.50%, 8) Liabilities and equity $20 Demand deposits $300 $200 Savings accounts (4.5%, 0.50) $200 $100 Interbank borrowings (1.5%, $200 0.01) Consumer loans (6%, 2.50) $400 Wholesale funding (5.5%, 0.25) $400 $400 Business loans (5.8%, 10) Variable-rate mortgages, repriced at quarter (6.3%, 0.25) $380 Equity $400 Due to...
1. Asset transformation and bank management True or False: All large banks and some small banks...
1. Asset transformation and bank management True or False: All large banks and some small banks chosen by the Federal Reserve perform asset transformation. True False Regardless of what size and form banks may be, they all operate under the same accounting rules and regulations. As such, we can use financial statements, especially balance sheets, as a guide when examining how banks are managed. Use the following categorization table to identify a bank's assets and liabilities. Assets Liabilities Demand deposits...
Net Income Provision for loan losses Income taxes Increases in bank's undivided profits 3. If you...
Net Income Provision for loan losses Income taxes Increases in bank's undivided profits 3. If you know the following figures: Total interest income $140 Total interest expenses Total noninterest income Total noninterest expenses Please calculate these items: Net interest income Net noninterest income Pretax net operating income Net income after taxes Total operating revenues Total operating expenses Dividends paid to common stockholders 4. If you know the following figures: Gross loans Allowance for loan losses Investment securities Common stock Surplus...
Classification Exercise: Based upon the items listed below, determine if they would be included on the...
Classification Exercise: Based upon the items listed below, determine if they would be included on the balance sheet or income statement. If it is on the balance sheet, determine if it is an asset, liability or equity. Account Title Common Stock (Owner's Investment) Salary Expense Salaries Payable Equipment Depreciation Expense Accumulated Depreciation Inventory Revenue Operating Income Accounts Payable Accrued Liabilities Land Cost of goods sold Retained earnings Cash Investments Net income Accounts Receivable Prepaid Insurance Classification
QUESTION 1 0.8 points Saved Assets Liabilities Reserves $100 Loans T-Bills Deposits S1,000 800 100 Refer...
QUESTION 1 0.8 points Saved Assets Liabilities Reserves $100 Loans T-Bills Deposits S1,000 800 100 Refer to this scenario for all of the questions on this problem set Suppose the balance sheet shown is for the only bank in the banking system. The reserve requirement is 10%. If the Fed buys $50 worth of T-bills from this bank, immediately after that exchange, before the bank expands its lending in response, the bank's reserves would equal 150 QUESTION 2 0.8 points...
Consider the First National Bank with T-account as shown below. The First National Bank chose a...
Consider the First National Bank with T-account as shown below. The First National Bank chose a 30% reserve ratio. First National Bank Assets Liabilities Reserves Deposits $100 Loans Capital (Owners' Equity) $10 Other Assets $10 (1) How much deposits did the First National Bank keep in reserves? (2) How much deposits did the First National Bank loan out? (3) What is the leverage ratio for the First National Bank? (4) If some of the consumers and businesses who borrowed from...
Exercise 7-40 Balance Sheet Presentation Listed below are items that may appear on a classified balance...
Exercise 7-40 Balance Sheet Presentation Listed below are items that may appear on a classified balance sheet. Required: Indicate whether each item is included as an operating asset on a classified balance sheet. If the item is an operating asset, indicate whether the item is property, plant, and equipment; an intangible asset; or a natural resource as well as the cost allocation process used (depreciation, amortization, or depletion). If the item is not an operating asset, indicate the proper balance...
Part 2: Problems 1. The are shown below average durations and dollar amounts of assets and liabilities held in International Bank Asset and Liability Items Avg.Duration yrs) Amount Investment Grade Bonds Commercial Loans Consumer Loans Deposits Nondeposit Borrowings $80.00 $500.00 $220.00 $600.00 2.00 5.00 8.00 1.0 $400.00 10 What is the weighted average duration of International Bank's asset portfolio? What is the weighted average duration of International Bank's liability portfolio? What is the leverage-adjusted duration gap? (1.5 point)
Part 2:...
Assignment Determine the proper category for the listed items. Category Options: 1. Interest Income 2. Interest Expense 3. Non-Interest Income 4. Non-Interest Expense o Items: Interest paid on time deposits Interest paid on CD's Interest received on US Treasury Securities Fees received on mortgage loan originations Dividends paid to shareholders Provision for loan los Interest earned on loans Interest earned on municipal bonds Employee salaries Purchase of new computer system Service charge receipts from customer accounts Rent paid on bank...
BIG Bank's balance sheet is listed below. Market yieilds and duratons (in years) are in parenthesis, and amounts are in millions. Assets Cash Interbank lending (1.5%, 0.05) T-bonds (7.50%, 8) $20 Demand deposits $200 | Savings accounts (4.5%, 0.50) $100 | Interbank borrowings (1.5%, $400 | Wholesale funding (5.5%, Llablitles and equlty $300 $200 $200 $400 0.01) Consumer loans (696, 2.50) 0.25) Business loans (5.8%, 10) $380 Equity $400 $400 Variable-rate mortgages repriced at quarter (6.3%, 0.25) Due to turbulence...
Question B6. (15 marks) BIG Bank's balance sheet is listed below. Market yields and durations (in years) are in parenthesis, and amounts are in millions. Assets Cash Interbank lending (1.5%, 0.05) T-bonds (7.50%, 8) Liabilities and equity $20 Demand deposits $300 $200 Savings accounts (4.5%, 0.50) $200 $100 Interbank borrowings (1.5%, $200 0.01) Consumer loans (6%, 2.50) $400 Wholesale funding (5.5%, 0.25) $400 $400 Business loans (5.8%, 10) Variable-rate mortgages, repriced at quarter (6.3%, 0.25) $380 Equity $400 Due to...
1. Asset transformation and bank management True or False: All large banks and some small banks chosen by the Federal Reserve perform asset transformation. True False Regardless of what size and form banks may be, they all operate under the same accounting rules and regulations. As such, we can use financial statements, especially balance sheets, as a guide when examining how banks are managed. Use the following categorization table to identify a bank's assets and liabilities. Assets Liabilities Demand deposits...
Net Income Provision for loan losses Income taxes Increases in bank's undivided profits 3. If you know the following figures: Total interest income $140 Total interest expenses Total noninterest income Total noninterest expenses Please calculate these items: Net interest income Net noninterest income Pretax net operating income Net income after taxes Total operating revenues Total operating expenses Dividends paid to common stockholders 4. If you know the following figures: Gross loans Allowance for loan losses Investment securities Common stock Surplus...
Classification Exercise: Based upon the items listed below, determine if they would be included on the balance sheet or income statement. If it is on the balance sheet, determine if it is an asset, liability or equity. Account Title Common Stock (Owner's Investment) Salary Expense Salaries Payable Equipment Depreciation Expense Accumulated Depreciation Inventory Revenue Operating Income Accounts Payable Accrued Liabilities Land Cost of goods sold Retained earnings Cash Investments Net income Accounts Receivable Prepaid Insurance Classification
QUESTION 1 0.8 points Saved Assets Liabilities Reserves $100 Loans T-Bills Deposits S1,000 800 100 Refer to this scenario for all of the questions on this problem set Suppose the balance sheet shown is for the only bank in the banking system. The reserve requirement is 10%. If the Fed buys $50 worth of T-bills from this bank, immediately after that exchange, before the bank expands its lending in response, the bank's reserves would equal 150 QUESTION 2 0.8 points...
Consider the First National Bank with T-account as shown below. The First National Bank chose a 30% reserve ratio. First National Bank Assets Liabilities Reserves Deposits $100 Loans Capital (Owners' Equity) $10 Other Assets $10 (1) How much deposits did the First National Bank keep in reserves? (2) How much deposits did the First National Bank loan out? (3) What is the leverage ratio for the First National Bank? (4) If some of the consumers and businesses who borrowed from...
Exercise 7-40 Balance Sheet Presentation Listed below are items that may appear on a classified balance sheet. Required: Indicate whether each item is included as an operating asset on a classified balance sheet. If the item is an operating asset, indicate whether the item is property, plant, and equipment; an intangible asset; or a natural resource as well as the cost allocation process used (depreciation, amortization, or depletion). If the item is not an operating asset, indicate the proper balance...
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