12. The Bank of Greater Pittsburg hasthe balance sheet listed on theright if it has to write off $26million in loans is it solvent orinsolvent (please explain youranswer).ReservesLoansSecuritiesAssets$200M Depostis$500M Debt$200M CapitalLiabilities$750M$125M$25M

Balance sheet:The balance sheet comprises of assets, liabilities and shareholders equity. The sum…

Answered: 12. The Bank of Greater Pittsburg has…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A bank is earning 6% on its $150 million in earning assets and is paying 4.75% on its liabilities. The bank's Net Interest Margin is __________________. A. 6.00% B. 10.75% C. 4.75% D. 1.25%
Pixar Bank has the following balance sheet: Assets Cash 21,000 Liabilities and Equity Demand Deposits 550,000 Short-term Securities 369,000 Interbank Borrowed 151,000 Loans Total 400,000 Equity 790,000 Total 89,000 790,000 Pixar Bank's largest customer decides to exercise a $10,000 loan commitment. If the bank chooses to meet this loan commitment using purchased liquidity management techniques, which of the following correctly describes the balance in each account after the transaction? Select one: O a. Loans $410,000 and Funds Borrowed = $161,000 O b. Loans = $400,000 and Funds Borrowed = $161,000 О с. Loans $410,000 and Equity = $99,000 O d. None of the above e. Cash $11,000 and Loans = $410,000
A bank has $5 million in liquid assets and $95 million in nonliquid assets. Large depositors unexpectedly withdraw $9 million in deposits. To cover the withdrawals the bank sells all of its liquid assets at book value but must sell $7 million at less than their book value of their nonliquid assets to raise the additional funds needs. As a result the bank's equity will Fall $3 million Fall $4 million Fall $7 million Remain unchanged Rise $5 million
Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the Bank's EM?
Risk Weight Bank Liabilities $ Bank Assets Cash and Treasury Securities Repurchase Agreements Municipal Bonds Single Family Home Mortgages $ 2,700 CMOS Commercial Loans Agricultural Loans Allowance for Loan Loss Bank Buildings Total $ 2,000 $ 1,000 $ 1,500 0% Deposits 20% Hot Money 20% Subordinated Debt 8,000 2$ 6,000 24 250 50% Common Stock 2$ 100 $ 2,500 $ 1,500 $ 2,100 $ (300) $ 2,000 $ 15,000 50% Surplus 100% Retained Earnings 2$ 300 2$ 350 100% 0% 100% 2$ 15,000 1. Calculate the minimum leverage capital for this bank.
A Bank has the following balance sheet (in millions), with the risk weights in parentheses. Liabilities and Equity Deposits $ 171 Subordinate debt (>5 years) S 8 Equity $ 16 Assets Cash (0%) $ 19 S 65 $ 115 ($ 4) $ 195. Total Liability and Equity $ 195 In addition, the bank has $30 million in commercial direct-credit substitute standby letters of Mortgage loans (50%) Consumer loans (100%) Reserve for loan losses Total Assets 3 credit to a public corporation and $30 million in 10-year FX forward contracts that are in the money by $2 million. a. What are the risk-adjusted on-balance-sheet assets of the bank as defined under the Basel III? b. What are the common equity Tier I (CET1) risk-based capital ratio, Tier I risk-based capital ratio, and the total risk-based capital ratio? c. Disregarding the capital conservation buffer, does the bank have sufficient capital to meet the Basel requirements?
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7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 25%. Tim, a Southeast Mutual Bank customer, deposits $1,800,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Assets Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 25%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) (Dollars) 1,800,000 Liabilities Change in Required Reserves (Dollars) Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Rosa, who immediately uses the funds to write a check to Nick. Nick deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls…
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.
Question: Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the bank's ROA?
. National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities. What is the CET1 risk-based ratio? What is the Tier I risk-based capital ratio? What is the total risk–based capital ratio?

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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