Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 12, Problem 3WNG
To determine
Identify the percentage change in bank's capital.
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What is the bank's net worth?
Assume that the T-chart shows the financial position of a small local bank.
Assets
Loans: $27.00
Bonds: $13.00
Reserves: $43.00
Liabilities
Deposits: $30.00
Describe how a bank would characterize loans and bank deposits on its balance sheet. Compare that to how you would characterize the same on your personal balance sheet.
Suppose a bank has $15 million in savings deposits, $7 million in checking deposits, $27 million in total deposits, and $9 million in debts. The bank is also holding $12 million in reserves, $4 million in short term government bonds, $16 million in securities, $2 million in loans. What is the bank’s net worth? Is the bank healthy or not?
Chapter 12 Solutions
Macroeconomics
Ch. 12.2 - Prob. 1STCh. 12.2 - Prob. 2STCh. 12.2 - Prob. 3STCh. 12.3 - Prob. 1STCh. 12.3 - Prob. 2STCh. 12.3 - Prob. 3STCh. 12.4 - Prob. 1STCh. 12.4 - Prob. 2STCh. 12.4 - Prob. 3STCh. 12 - How much money did you make last year? What is...
Ch. 12 - Prob. 2QPCh. 12 - Prob. 3QPCh. 12 - Prob. 4QPCh. 12 - Prob. 5QPCh. 12 - Prob. 6QPCh. 12 - Prob. 7QPCh. 12 - Prob. 8QPCh. 12 - Prob. 9QPCh. 12 - Prob. 10QPCh. 12 - Prob. 11QPCh. 12 - Prob. 12QPCh. 12 - Prob. 13QPCh. 12 - Prob. 14QPCh. 12 - Prob. 15QPCh. 12 - Prob. 16QPCh. 12 - Prob. 17QPCh. 12 - Prob. 1WNGCh. 12 - Prob. 2WNGCh. 12 - Prob. 3WNGCh. 12 - Prob. 4WNGCh. 12 - Prob. 5WNGCh. 12 - Prob. 6WNGCh. 12 - Prob. 7WNGCh. 12 - Prob. 8WNGCh. 12 - Prob. 9WNGCh. 12 - Prob. 10WNG
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Similar questions
- A bank has deposits of 400. It holds reserves of 50. It has purchased government bonds worth 70. It has made loans of 500. Set up a T-account balance sheet for the bank, with assets and liabilities, and calculate the banks net worth.arrow_forwardHow does the stock market fit in the concept of banking? Is it a bank? Or stocks a form of money?arrow_forwardWhat is a bank? What are its functions in our economy?arrow_forward
- Stealth bank has deposits of $700 million. It holds reserves of $10 million and has purchased government bonds worth $300 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank's assets? [REMEMBER TO INCLUDE THE CORRECT NUMBR OF ZEROS IN YOUR ANSWER].arrow_forwardWhat is the risk if a bank does not diversify its loans?arrow_forwardA bank has the following balance sheet: Assets Liabilities Rate-sensitive $100 million Rate-sensitive $75 million Fixed-rate $100 million Fixed-rate $125 million Explain what would happen to bank profits if the interest rates in the economy go down?arrow_forward
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