Suppose you deposit $100 in a bank, which of the following will occur A The bank's assets will increase by $100 B The bank's liabilities will increase by $200 C The bank's liabilities will decrease by $100 D The bank's reserves will increase by $200

Suppose you deposit $100 in a bank, which of the following will occur A The bank's assets will increase by $100 B The bank's liabilities will increase by $200 C The bank's liabilities will decrease by $100 D The bank's reserves will increase by $200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: What is the bank's return on assets (ROA)? Write your answer as a percent rate.

A: Financial ratios are those which provide a summary of the accounts of a company and helps an…

Q: Lambrook Bank has the following assets and liabilities: Asset A has a maturity of 4 years and a…

A: A bank has in its books different interest rate sensitive assets and interest rate sensitive…

Q: A bank starts with $200 in deposits. The required reserve ratio is 10%. The bank loans out 70% of…

A: The bank keeps an amount as a reserve from their deposits so that they could be used at the time of…

Q: A bank has $770 million in checkable deposits. The bank has $85 million in reserves. If the reserve…

A: Checkable deposits = $770 million Reserves = $85 million Reserve requirement = 10% The bank's…

Q: A bank has the following balance sheet Cash $10 min Loans and securities $125 min Deposits $120 mln…

A: Option C is Correct :Cash will go down by $10 mln , deposits down by $20 mln , loans will go down by…

Q: How much do you have to deposit now with a second deposit in the amount of $700 at the end of the…

A: Second deposit at the end of first year is $700 Amount withdraw at the end of year 2 to 4 is $150…

Q: Suppose that the household, with the same P10,000 per month earnings, decides to deposit P3,333.33…

A: Bonds are interest-paying securities that are issued by a corporation or the government to raise…

Q: 2. (Credit Cycles) Consider a bank with the balance sheet given below Assets Liabilities Reserves…

A: Bank Statement - A bank statement is a formal description of all financial activities for each bank…

Q: Assets- reserves: 75000 loans : 430000 liabilities : deposites : 500000 net worth : 5000 a)…

Q: Solve for the amount of money that the bank can lend, given the reserves that are legally required…

A: Banks require to maintain the portion of the deposits into the safe custody which are required to be…

Q: Suppose a bank has $1,000 in deposits and $100 in reserves. If the desired reserve ratio is 5…

A: Reserve ratio is the percentage of bank's deposits that must be kept in cash as a reserve to meet…

Q: Which of the following would increase a bank’s Net Interest Margin, assuming all else stays the…

Q: Acme Bank: Net profit after taxes = $10 million Assets = 200…

A: Assets are the total belongings of the business which are used in income generation. Equity is the…

Q: A bank has an average duration of assets (DURa) of 3.6 and an average duration of liabilities (DURl)…

A: Duration gap analysis is a method to calculate changes in the market value of assets, liabilities…

Q: c) During the Christmas season, the public wants to hold more currency to buy gifts and so withdraws…

A: Answer: The Answer is - Banking System Explanation - As people withdraw money, the deposits with…

Q: If a bank has quarterly deposit interest expense of $1MM, an average deposit portfolio of $3.2Bn and…

A: Solution:- Interest bearing deposit cost for bank means the bank’s interest expense for its interest…

Q: You manage a bank that has $500 million of fixed-rate assets, $600 million of rate-sensitive assets,…

A: given information fixed rate assets = $500 million rate sensitive assets = $600 million fixed rate…

Q: A bank is considering offering a loan of $100,000 to a client. If the loan is not offered, then the…

A: EVPI means different between two alternatives on the basis of monetary value. It helps to determine…

Q: Consider a failing bank. If the FDIC uses the payoff method a deposit of $330,000 is worth a…

A: FDIC is one kind of insurance to the deposit made by the depositers in bank and provide safety of…

Q: 4. Assume for US bank the interest rate on loans is 10% and on Treasury bonds 8%. The interest rate…

A: Accounting equation refers to the basis of accounting which states that the transaction would impact…

Q: Assume you have invested $10,000 into a bank at an interest rate of 6% per year. The bank has…

A: in this we have to calculate present value of both option.

Q: 3. Suppose you dopiest SR 5000 in currency into your checking account at a branch of Al-Rajhi Bank,…

A: Balance sheet stands for the statement and information that shows the assets and liabilities of the…

Q: The fee banks pay to the FDIC for deposit insurance is now: a fixed dollar amount for all banks. O a…

A: In this question, we are required to determine the mode of computation of fees paid by banks to…

Q: Ubu Bank has the following assets and liabilities : Asset X has a maturity of 3 years and a…

A: The difference between the weighted average maturity of a bank's assets and the weighted average…

Q: Consider a bank with the following balance sheet: Assets Required reserves Excess reserves Municipal…

A: Under Basel 1 weights are assigned to the assets are given below:1- Risk weight for cash is = 0%2-…

Q: The First Bank has total reserves of $1000, excess reserves of $800, and required reserves of $200.…

A: Answer is option b) $800

Q: Use the information given in Upper Midwest National Bank's balance sheet to answer the following…

A: A leverage ratio is a type of solvency ratio. It is calculated by dividing the total debt by the…

Q: Questions 4-9 refer to the following balance sheet of a hypothetical private bank called Bank A. You…

A: In the above question, bank A has sold all of its loan worth 100 to bank B at a loss of 20 for which…

Q: Your cousin has asked for your advice on whether or not to buy a bond for $995, which will make one…

A: Here, Buying Price of Bond is $995 One Time Payment after 5 years is $1,200 Time Period is 5 years

Q: on the cost of funds through savings is 2% while the Federal funds rate is 5%. Show how ead the…

A: Interest Rate- The fees assessed to the borrower in exchange for the assets taken from the lenders…

Q: A. Determine the maximum amount of new loans that this bank can make. Present in columns 1 and 1'…

A: Loan refers to the borrowed amount or the amount given by one party to another for repayment till a…

Q: Bank A just received total deposit equal to $30,700,000.00. Required reserve ratio for the banking…

A: The Reserve ratio is basically the percentage amount of reserves that a bank should maintain to meet…

Q: Consider a bank with the following balance sheet: Assets Required reserves Excess reserves Municipal…

A: As per Basel 1,1- Risk weight for cash is = 0%2- Risk weight for municipal bonds and residential…

Q: Consider a bank with the following balance sheet (M means million): Assets Value Duration of the…

A: Solution: To have a solution for D we must compute C for an Equity value By raising the interest…

Q: H1. A bank bill with a face value of $250,000 was issued today and it matures in 60 days' time.…

A: Present value is referred to as the current value of the future sum of the funds/cash flows stream…

Q: If you make yearly deposits of $1200 in a bank account, how much money will you have in your account…

A: Future value of annuity = P * [ (1+r)^n - 1 ] /r Where r = rate of interest i.e. 6% n = no. of…

Q: Balance sheet ($ million) $10 50 15 Cash Loans Securities Deposit Equity $68 7 The bank is expecting…

A: In banking, "expected drain" means predicting the decline or depletion of deposits from the bank…

Q: Below, we see the balance sheet for Schlau Bank. Assets Reserves: $100 Long-term investments: $ 100…

A: A balance sheet shows the financial position of the entity. The balance sheet of a bank is quite…

Q: 2) Calgary Finance Bank has the following balance sheet: Liabilities Chequable Deposits Capital…

A: 1. The deposit of $20 bill will decrease chequable deposits and reserves by $20

Q: 17. Assume that a bank obtains most of its funds from long-term borrowed funds such as Federal Home…

A: We have to assess the impact of an interest rate increase on the bank.

Q: 3. You make a deposit of $100 in year 1, $200 in year 3, $500 in year 7. Interest rate is 6%. How…

A: Year 1 Deposit made in year 1=$100 and this amount remains in the bank for 2 years as no deposit is…

Q: Assets Liabilities and Net Worth (1) (2) Reserves P220,000 Securities 380,000 Loans Checkable…

A: D.1 Now the reserve ratio is to be assumed at 15% Checkable deposits are worth P1,000,000. The…

Q: Answer the next questions which are based on the following balance sheet of Bank A. Assume the…

A: Reserve Requirement (RR) : The minimum amount of reserves that a bank must hold on to is referred to…

Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

100%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: introduction of bank account

VIEW

Step 2: Explanation of correct option

VIEW

Step 3: Explanation of incorrect option

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A person invested two amounts in a bank for a full year at a common interest rate.So the total interest on the two amounts was $ 320.If you know that the interest of the second amount, which equals $ 3,000 exceeds the interest of the first amount by $ 160What is the value of the first amount and what is the interest rate?
PLEASE SOLVE
Am. 113.
Calculate profit of the bank if you know that: a. You accept deposit 2000 b. Obligatory reserve rate = 10% c. Rate for deposit = 5% d. You invest as much as you can in bonds which have present value 80 and will be bought by 100 in year from now
In 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
The T-account below represents assets and liabilities for a bank. Use the T-account to calculate the bank's loans Loans Bonds Reserves Provide your answer below: million Assets ? $18 million $5 million Liabilities + Net Worth Deposits Net Worth $12 million $13 million
Assume that banks holds no excess reserves and the public holds no currency: A. If a bank receives a deposit inflow of $100,000 explain (using t-accounts) what happens to this bank and one additional round in the deposit creation process assuming the reserve requirement is 8%. B. How much do deposits and loans change for the banking system when the process is completed? Show computation and the entire banking system's final T-account. C. Suppose the Central Bank sells $5 billion to ABC Bank. Determine what happens to checkable deposits of the entire banking system after the sale and completion of the multiple deposit creation process. Determine the change in checkable deposit in the banking system and show the T-account of the banking system.
Phil Frugal has been saving his pennies since he was 5 years old. He is now 45 and deposits his savings in a bank. His pennies total $5,000. Using this information and your knowledge of the banking system, select the best match for each item. Then calculate the values of reserves, required reserves, and excess reserves. Assume a required reserve ratio of 10%. Answer parts a. & b. a. The amount of reserves the bank owes to other banks: (Choose one of the 4 options) : required reserves, excess reserves, reserves or none of these The maximum amount of reserves available for loans: required reserves, excess reserves, reserves or none of these The amount of reserves the bank must set aside to loan to member banks: required reserves, excess reserves,reserves or none of these b. Enter the values of reserves, excess reserves, and required reserves. Reserves: $ Excess reserves: $ Required reserves: $
You will deposit money into a bank account according to the following schedulet today year from today $225,000 $53,500 years from today years from today $49,750 4 $21,200 years from today $112,050 After 6 years from today, what will be the purchasing power of the money in your bank account, expressed in today's dollars? Your bank pays interest at 2.5000% compounded yearly and inflation is expected to be 1.1250% per year.
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. 6.5
Which of the following statements are most likely to be false? 1. The effective annual interest rate will always be greater than the quoted (or annual percentage) interest rate. II. All else being the same, the present value of a five-year, $10,000 annuity due will be higher than the present value of a five-year, $10,000 ordinary annuity. III. If you were depositing funds at a bank, and the quoted interest rate was 4% p.a., you would be better off if the bank used semi-annual compounding rather than quarterly compounding. I and II only. I and III only. II and III only. I, II and III.
A new bank has vault cash of $2 million and $6 million in deposits held at its Federal Reserve District Bank.If the required reserves ratio is 9 percent, what dollar amount of deposits can the bank have?