A bank has the following balance sheet Cash $10 min Loans and securities $125 min Deposits $120 mln Equity $ 15 min Depositors request $20 mln in withdrawals. Assuming no new deposits or raising of capital and any selling of loans and securities will only get 75% of its stated value, what possibilities will occur? O Cash will go down by $10 min, deposits down by $20 mln. loans will go down by $13.33 min, and equity will be increased by $3.33 min O Cash will go down by $20 mln. deposits down by $20 mln, and equity down by $20 min O Cash will go down by $10 min, deposits down by $20 mln, loans will go down by $13.33 mln, and equity will be reduced by $3.33 min. O No answer text provided.
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- Suppose a bank has $1,000 in deposits and $100 in reserves. If the desired reserve ratio is 5 percent, how much can this bank increase its loans? O a. $50 O b. $80 O c. $0 O d. $400 O e. $100Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, what is the bank's resulting reserve ratio (expressed as a %)? Using the information from the prior problem, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?[1]- If a person deposits $1000 per quarter into an account at an interest rate of 12% persemiannually.a) Draw cash flow diagram, CFD?b) How much will be in the account at the end of 6 years? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Bank A just received total deposit equal to $30,700,000.00. Required reserve ratio for the banking system is set at 2.1%, (or 0.021). a. How much of the total deposit can bank A lend out? In other words, what is bank A's excess reserve? $ b. By how much will total money supply change if bank A, and all subsequent banks, are able to lend out their entire excess reserves as the result of the initial $30,700,000.00 deposit in bank A? $Assume that ABC bank has $10 in deposits, with a required reserve ratio of 10% it is holding $3M in required reserve. There is a substantial withdrawal of $3M. Consider cost and customer service you are required to adjust the balance sheet after the withdrawal. The bank has no desire to borrow. List the new values for assets and liabilities after the withdrawal Assets Required Liabilities Deposits 3,000,000 10,000,000 reserve Loans Securities Total 20,000,000 12,000,000 35,000,000 Capital 25, 000,000 35,000,000In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. Bank A Cash Reserves for Deposit ? Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 If Cash Reserves for deposit is at least 8% of the deposit under the Basel Accord, how much of the G-Bond Bank A should purchase? $17 $14 $16 $18 $20 $15 $19 $21
- Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years. Assets Liabilities Required Reserves 8 m Money Market Deposits 50 m Excess Reserves 7 m 3-year CDs 60 m T-bills 85 m Capital 10 m Mortgages 15m Commercial paper 5m What happens to the value of liability if the interest rate goes down by 1%? up by 2% down by 2% O down by 1.36% O up by 1.36%Suppose the Royal Bank of Pullman has the following assets: cash = 100 (with modified duration of 0) and a 10-year loan worth $900 (with modified duration of 9). Its liabilities are a CD worth $800 (with a modified duration of 2). If interest rates rise by 1% the bank's equity will fall by ________ %. A. 9 B. 5.6 C. 2 D. 6.5Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?
- Suppose that you borrow a loan of amount P from a bank at the end of month 3 and make the monthly deposits to the bank as in the cash flow diagram below. In the following cash flow diagram A7=A8=A9=1000, and starting with A10, deposits start decreasing in the amount of 40. However, due to a cash problem, you miss a payment at month 12 but continue with your original payment plan thereafter (that is, A10=960, A11=920, A12=0, A13=840 etc). With these payments, your dept to the bank will be 0 at the end of month 20. Assuming that the interest rate is 12% compounded monthly. 1-Find out the initial loan amount P. 2-Find the total interest paid to the bankf. The average interest earned on the loans is 7 percent and the average cost of deposits is 6 percent. Rising interest rates are expected to reduce the deposits by $1.5 million. Borrowing (Incurring) more debt will cost the bank 8 percent in the short term. Liabilities and Equity $8 million $2 million $2 million $12 million Assets $2 million | Deposits $10 million Long-term Debt Equity $12 million Total Cash Required Reserves Loans Total What will be the cost of using a strategy of purchased liquidity management to meet the expected decline in deposits? Assume that the bank intends to keep $2 million in cash as liquidity precaution.A bank has an interest rate spread of 150 basis points on $30 million in earning assets funded by interest-bearing liabilities. However, the interest rate on its assets is fixed and the interest rate on its liabilities is variable. If all interest rates go up 50 basis points, the bank's new pretax net interest income will be __________. a. $600,000 b. $450,000 c. $300,000 d. $250,000 e. $175,000 Clear my choice