Bank Balance Sheet Assets Liabilities and Equity Reserves $20,000 Deposits $100,000 Loans 95,000 Debt 30,000 Securities 30,000 Equity 15,000 Using the table above and suppose a recession causes our bank's assets to fall by 5%, determine the leverage ratio. $137,750 9.67 17.77 9.18
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- Reserves Treasury Securities Real Estate Loans Commercial Loans O 7.69%, No O 8.14%, Yes Assets O 7.27%, No O 6.45%, Yes Table 10 $15 $10 $64 $66 Use Table 10 to calculate the risk weighted capital ratio of First National Bank. Is it well capitalized? Use weights of zero for risk free assets and 0.95 for risky assets. Deposits Capital Liabilities $145 ?First National Bank Assets Liabilities Rate-sensitive $80 million $50 million Fixed-rate $20 million $50 million according to the above balance sheet, if interest rates rise by 5 percentage points, say, from 10 to 15%, bank profits (measured using gap analysis) will increase by $___ million (put a negative sign if it is a decrease)First National Bank Assets Liabilities Rate-sensitive $80 million $50 million fixed-rate $20 million $50 million according to the above balance sheet, if interest rates rise by 5 percentage points, say, from 10 to 15%, bank profits (measured using gap analysis) will: decline by $0.5 million increase by $1.5 million decline by $2.5 million decline by $1.5 million
- Rate-sensitive Fixed-rate Assets $20 million $80 million Liabilities $50 million $50 million 9) If interest rates rise by 5 percentage points, say, from 10 to 15%, bank profits (measured using gap analysis) will (Show your calculation) A) decline by $0.5 million. B) decline by $1.5 million. C) decline by $2.5 million. D) increase by $1.5 million.Consider a bank with the balance sheet given below. Assets Liabilities $ 80 million Reserves $ 10 million Deposits Securities $50 million Bank Capital $ 30 million Loans Answer the following questions. · Because of the decreased bank capital, the bank has to sell their assets by 10 million dollars. Suppose that it decides to sell securities. Since many other banks are in the same situation and they sold securities, too. Because of the surge of supply, the price of the securities had dropped and it caused the depreciation of bank's securities by 5 million dollar worth. Draw the resulting bank balance sheet.Bank leverage Use the information given in Great Lakes National Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $150 Deposits $1,200 Loans $600 Debt $200 Securities $750 Capital (owners' equity) $100 Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and the account. This would also bring the leverage ratio from its initial value of to a new value of
- You manage a bank that has $500 million of fixed-rate assets, $600 million of rate-sensitive assets, $1000 million of fixed-rate liabilities, and $100 million of rate-sensitive liabilities. A. Do a gap analysis and show what will happen to bank profits if interest rates rise by 4%. Show your work. B. What happens to the bank’s profits if interest rates fall by 7%?Suppose that you are the manager of a bank that has $15 million of fixed-rate assets, $30 million of rate-sensitive assets, $25 million of fixed-rate liabilities, and $20 million of rate-sensitive liabilities. Conduct a gap analysis LOADING... for the bank, and show what will happen to bank profits if interest rates rise by 5 percentage points. The change in bank profits is $nothing million.| Suppose that FirstBank has the following simplified balance sheet. Assume that all other components of the balance sheet are equal to zero. Assets Liabilities reserves 3,920 demand deposits 32,000 loans 28,080 32,000 32,000 Assume that the reserve ratio is r= .10 (10%). a. Does FirstBank have excess reserves? If so, of how much? b. Suppose that FirstBank desires to hold no excess reserves, so it loans out its excess reserves to borrowers. How does the balance sheet change? Either use T-accounts or a new balance sheet to show. c. Starting back in a), what is the maximum deposit outflow that FirstBank can sustain without affecting other parts of the balance sheet?
- Imagine that a given investment bank generated a return on assets of 10% which lead to a doubling of bank capital. What was the asset to equity ratio in this bank? 0.5 10 5 11. A bank has deposits of 100 billion and leverage ratio of 12. Assume that it has a reserve ratio of 20 percent, and it holds no excess reserves. Further suppose that bank capital is $36 billion. Lump all assets besides ‘reserves’ into a category labeled ‘other’.a) Write down a t-account for the bank. Briefly explain how you come up with any number.b) Suppose the new legislation requires banks to have a reserve ratio of at least 30 percent. The bank meets this requirement by issuing new debt. There is no change in the amount of deposits. Show the new t-account. What is the new leverage ratio? (Please answer the entire question)Consider the following balance sheet Expected Balance Sheet for XYZ Bank Assets Yield Liabilities Cost Rate sensitive $ 800 7.0% 500 3.0% Fixed rate $ 400 9.0% 300 5.0% Non earning $ 200 200 $ 1,000 Equity 400 Total $ 1,400 $ 1,400 What is the Net Interest Margin (NIM) Select one: O a. 4.5% O b. 6.2% O c. 5.17% O d. 7.12% %24 %24 %24