Below is Econbank's balance sheet. Assets Liabilities and Owners' Equity Reserves $100 Deposits $800 Loans $600 Debt $280 Securities $500 Capital (owners' equity) $120 a. Calcualte the bank's total assets. b. Calculated the bank's total liabilities. c. Calculate the bank's reserve-deposit ratio. d. Calculate the bank's leverage ratio. e. If the value of the bank's securities rises by 24%, by what percentage does the bank assets rise? By what percentage does the bank capital rise? Draw the new balance sheet of the bank. f. How large a decline in the value of bank assets would it take to reduce the bank's capital to zero?

Below is Econbank's balance sheet. Assets Liabilities and Owners' Equity Reserves $100 Deposits $800 Loans $600 Debt $280 Securities $500 Capital (owners' equity) $120 a. Calcualte the bank's total assets. b. Calculated the bank's total liabilities. c. Calculate the bank's reserve-deposit ratio. d. Calculate the bank's leverage ratio. e. If the value of the bank's securities rises by 24%, by what percentage does the bank assets rise? By what percentage does the bank capital rise? Draw the new balance sheet of the bank. f. How large a decline in the value of bank assets would it take to reduce the bank's capital to zero?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter27: Money And Banking

Section: Chapter Questions

Problem 30P: A bank has deposits of 400. It holds reserves of 50. It has purchased government bonds worth 70. It...

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