Assets Liabilities Reserves $ 200 Deposits $800 Loans $700 Debt $100 Securities $ 100 Capital $100 Refer to the same T-account. By how much do the assets need to cepreciate for the bank to go insolvent? a.more than 5% b.more than T0R6 Oc.more than 8%6

12. The Bank of Greater Pittsburg has the balance sheet listed on the right if it has to write off $26 million in loans is it solvent or insolvent (please explain your answer). Reserves Loans Securities Assets $200M Depostis $500M Debt $200M Capital Liabilities $750M $125M $25M

Balance sheet ($ million) Cash $10 50 Loans Securities 15 Deposit Equity $68 7 The bank is expecting a $15 net deposit drain. Show the bank's balance sheet if: a. The bank purchases liability to offset this expected drain. b. The bank uses the asset side liquidity to finance this expected drain.

Below, we see the balance sheet for Schlau Bank. Assets Reserves: $ 100 Long-term investments: $ 100 Total Assets: ? Liabilities Demand deposits: $ 150 Borrowing from other banks: $40 Total liabilities: ? Stockholders' equity: ? a. Calculate the stockholders' equity for Schlau Bank. b. After a mortgage crisis, 20% of the Schlau Bank's long-term investments default, losing completely their value. Is Schlau Bank able to withstand this test without getting insolvent? Explain your answer. c. In case of insolvency, explain (briefly) how the Fed minimizes the risk of possible losses by depositors and preverits a bank run from happening in (healthy) banks in the financial system. Table