1. Bank’s Balance Sheets (The answers in relative lecture videos) a) Loans are listed as assets...
1. Bank’s Balance Sheets (The answers in relative lecture videos)
a) Loans are listed as assets or liabilities of a bank?
b) What are loans key characteristics? List different types of loans?
c) Please rank from high to low the liquidity of reserves, securities and loans for a bank.
2. Liquidity Risk
Your bank has the following balance sheet:
Assets Liabilities (unit in million)
Reserves $50 Checkable deposits $200
Securities 50
Loans 150 Bank capital 50
a) What is the definition of liquidity risk?
b) If there is an unexpected deposit outflow of $50 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk?
Assets Liabilities
Reserves $_____ Checkable deposits $________
Securities _____
Loans _____ Bank capital ____
c) If there is an unexpected deposit outflow of $100 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk?
Assets Liabilities
Reserves $_____ Checkable deposits $________
Securities _____
Loans _____ Bank capital ____
d) If there is an unexpected deposit outflow of $150 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk?
Assets Liabilities
Reserves $_____ Checkable deposits $________
Securities _____
Loans _____ Bank capital ____
Homework Answers
1)
(a) Loans are an asset for a bank since banks earn interest income from lending.
(b)
Loans have the following key characteristics:
- Time to maturity. Time to maturity describes the length of the loan contract.
- Repayment Schedule. Payments may be required at the end of the contract or at set intervals, usually on a monthly or semi-annual basis.
- Interest
- Security
Types of Loans:
- Debt Consolidation Loans. A consolidation loan is meant to simplify your finances.
- Student Loans. Student loans are offered to college students and their families to help cover the cost of higher education.
- Mortgages.
- Auto Loans.
- Personal Loans.
- Loans for Veterans.
- Small Business Loans.
- Payday Loans
(C) Ranking of liquidity from highest to lowest is:
Reserves
Securities
Loans
Add Answer to:
1. Bank’s Balance Sheets (The answers in relative lecture
videos)
a) Loans are listed as assets...
Your bank has the following balance sheet: Assets Liabilities (unit in million)
Your bank has the following balance sheet: Assets Liabilities (unit in million) Reserves $50 Checkable deposits $200 Securities 50 Loans 150 Bank capital 50 b) If there is an unexpected deposit outflow of $50 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk? Assets Liabilities Reserves $_____ Checkable deposits $________ Securities _____ Loans _____ Bank capital ____
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...
QUESTION 2: Your bank has the following balance sheet (Unit: million). The required reserve ratio is...
QUESTION 2:
Your bank has the following balance sheet (Unit: million). The
required reserve ratio is 10%.
To fill in the following tables, instead of using a positive or
negative sign to indicate changes in the item, you need to write
down the value for items in each cell.
(A) Update the balance sheet if there is an unexpected deposit
outflow of $50 million.
(B) How much more reserves this bank needs to meet the
requirement?
(C) Write down all...
When you answer 4 short-answer questions, don't write in cursive. Please, print your answers. For all...
When you answer 4 short-answer questions, don't write in cursive. Please, print your answers. For all questions, be sure to explain your answers and to use graphs whenever appropriate. When you use graphs, be sure to (1) label y and x axis and (2) draw appropriate arrows if any curve shifts. 21) Consider a Bank that has the following balance sheet: Assets Liabilities Reserves $50 million Checkable deposits $200 million Securities $50 million Loans $150 million Bank Capital $50 million...
The balance sheet for ACME Bank is shown below. ACME Bank Balance Sheet 1 Assets Liabilities...
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...
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...
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.
Question 3 A bank has the following assets and liabilities: Mortgage Loans: $240 million Consumer Loans:...
Question 3 A bank has the following assets and liabilities: Mortgage Loans: $240 million Consumer Loans: $250 million Discount Loans: $25 million Demand Deposits: $400 million NOW Deposits: $100 million Treasuries: $25 million Municipal Bonds: $10 million a) The bank has 10% in required reserves and 8% in excess reserves. Calculate the bank capital and show the balance sheet of the bank. b) Assume that net profits after taxes are $6 million. Calculate ROA, ROE, EM, leverage ratio, and capital...
6. Jackson National Bank has the following balance sheet: (10 pts.) Assets Reserves Loans $50 million...
6. Jackson National Bank has the following balance sheet: (10 pts.) Assets Reserves Loans $50 million $450 million Liabilities Deposits Bank Capital $400 million $100 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio of 10 percent, show and explain the effects on the T-Account and discuss the possible options that the bank president/manager can use if necessary to remain compliant
09: If a deposit outflow pf $50 million occurs, which balance sheet would a bank teller...
09: If a deposit outflow pf $50 million occurs, which balance sheet would a bank teller have initially? Balance Sheet One Assets: Reserves- $ 100 million and Loans $500 million Liabilities: Deposits- $500 million and Bank Capital- $100 million. Balance sheet Two Assets: Reserves - $75 million and Loans $525 million Liabilities: Deposits- $500 million and Bank Capital- $100 million Chapter Ten: Q10: Why are deposit insurance and other type of government safety net important to the health of the...
QUESTION 2:
Your bank has the following balance sheet (Unit: million). The
required reserve ratio is 10%.
To fill in the following tables, instead of using a positive or
negative sign to indicate changes in the item, you need to write
down the value for items in each cell.
(A) Update the balance sheet if there is an unexpected deposit
outflow of $50 million.
(B) How much more reserves this bank needs to meet the
requirement?
(C) Write down all...
When you answer 4 short-answer questions, don't write in cursive. Please, print your answers. For all questions, be sure to explain your answers and to use graphs whenever appropriate. When you use graphs, be sure to (1) label y and x axis and (2) draw appropriate arrows if any curve shifts. 21) Consider a Bank that has the following balance sheet: Assets Liabilities Reserves $50 million Checkable deposits $200 million Securities $50 million Loans $150 million Bank Capital $50 million...
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...
Question 3 A bank has the following assets and liabilities: Mortgage Loans: $240 million Consumer Loans: $250 million Discount Loans: $25 million Demand Deposits: $400 million NOW Deposits: $100 million Treasuries: $25 million Municipal Bonds: $10 million a) The bank has 10% in required reserves and 8% in excess reserves. Calculate the bank capital and show the balance sheet of the bank. b) Assume that net profits after taxes are $6 million. Calculate ROA, ROE, EM, leverage ratio, and capital...
6. Jackson National Bank has the following balance sheet: (10 pts.) Assets Reserves Loans $50 million $450 million Liabilities Deposits Bank Capital $400 million $100 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio of 10 percent, show and explain the effects on the T-Account and discuss the possible options that the bank president/manager can use if necessary to remain compliant
09: If a deposit outflow pf $50 million occurs, which balance sheet would a bank teller have initially? Balance Sheet One Assets: Reserves- $ 100 million and Loans $500 million Liabilities: Deposits- $500 million and Bank Capital- $100 million. Balance sheet Two Assets: Reserves - $75 million and Loans $525 million Liabilities: Deposits- $500 million and Bank Capital- $100 million Chapter Ten: Q10: Why are deposit insurance and other type of government safety net important to the health of the...
Most questions answered within 3 hours.
-
Assume one of your finals has 50 questions on it, and
lucky for you, it's all...
asked 56 minutes ago -
Rice Products in Bangladesh
Business behavior is derived in large part from the basic cultural
environment...
asked 2 hours ago -
The following base sequence is found for a mRNA fragment from
wild-type E. coli: 5'- UAUCAGUAGAUAAUGUAACC-3'...
asked 2 hours ago -
For this exercise, round all regression parameters to three
decimal places.
One of the two tables...
asked 2 hours ago -
What is the 5% level of significance for mean = 3.60, standard
deviation = 0.94, and...
asked 3 hours ago -
Prior to beginning work on this discussion, please read the
article by Hayley Peterson, 15 Companies...
asked 3 hours ago -
Which pair of aqueous solutions, when mixed, will form a
precipitate?
A) NaNO3 and AgC2H3O2
B)...
asked 3 hours ago -
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 7 hours ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 7 hours ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 7 hours ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 8 hours ago -
When a metal rod is heated, not only its resistance but also its
length and cross‐sectional...
asked 8 hours ago