PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 19, Problem 20PS
Summary Introduction

To determine: The amount of debt

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The liabilities and owners’ equity for Campbell Industries is found here. What percentage of the firm’s assets does the firm now finance using debt (liabilities)? If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm’s new debt ratio?
If a bank has a positive interest-sensitive gap, one of the possible management responses would be to: wait for the interest rates to rise or be shorten asset decrease interest-sensitive increase interest-sensitive     The First National Bank of Trinidad reports a net interest margin of 5.83 percent. It has total interest revenues of $275 million and total interest expenses of $210 million. What will be the bank's earning assets total? $4,717 million $3,602 million $1,115 million $3,790 million     The First National Bank of Trinidad reports a net interest margin of 5.83 percent. It has total interest revenues of $275 million and total interest expenses of $210 million. This bank has earnings assets of $1,115. Suppose this bank's interest revenues rise by 8 percent and its interest expenses and earnings assets rise by 10 percent what is this bank's new net interest margin? 83 percent 09 percent 59 percent 38 percent     If Fifth National Bank's asset duration exceeds its…
AAB Bank holds $100 in bank capital and $100 in securities, and then takes in $600 in deposits. It keeps 10 percent of deposits in reserve. It uses the rest of its reserves to make bank loans. a. Explain the balance sheet (T-account) for AAB Bank. b. What is AAB Bank's leverage ratio? c. Suppose that 10 percent of the borrowers from AAB Bank default and these bank loans become worthless. How does the bank's new balance sheet look? d. By what percentage do the bank's total assets decline? By what percentage does the bank's total capital decline? Which change is larger? Why? Is the bank still solvent and why?
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