9. Bank leverage Use the information given in Upper Midwest National Bank's balance sheet to answer the following questions. Assets Reserves Loans Bank's Balance Sheet $125 Liabilities and Owners' Equity $1,250 Deposits $625 Debt Securities $500 Capital (owners' equity) Suppose a new customer adds $100 to his account at Upper Midwest National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and increase the debt account. $75 This would also bring the leverage ratio from its initial value of -16.67 to a new value of -18.00 The riskiness of each asset -$75 Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base ✔The total value of liabilities

9. Bank leverage Use the information given in Upper Midwest National Bank's balance sheet to answer the following questions. Assets Reserves Loans Bank's Balance Sheet $125 Liabilities and Owners' Equity $1,250 Deposits $625 Debt Securities $500 Capital (owners' equity) Suppose a new customer adds $100 to his account at Upper Midwest National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and increase the debt account. $75 This would also bring the leverage ratio from its initial value of -16.67 to a new value of -18.00 The riskiness of each asset -$75 Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base ✔The total value of liabilities

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Suppose Bank A initially started with $14 million in capital. A total of $156 million in checkable deposits is received. The Bank purchases securities worth of $50 million and the bank then makes a $50million commercial loan and lends another $20 million in mortgage loans. If required reserves are 15%, what does the bank balance sheet look like? (be sure to indicate required and excess reserves separately)
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Refer to Table 10.1. First Commercial Bank's total loans equal $________. First Commercial Bank Assets Liabilities + Net Worth Reserves $200,000 $1 million Deposits Required -- $200,000 Net Worth Excess $50,000 Loans -- Total $1.2 million $1.2 million Total 1,000,000. 1,050,000 1,150,000 1,200,000
2. Here is the balance sheet of the consolidated banking system of the country of Zargadee (all entries are in millions): Consolidated Balance Sheet of the Entire Economy of Zargadee Assets Reserves Cash in Vault Deposits at CBZ Bonds Loans 50 90 Total Reserves Total Assets 140 460 1000 1600 Liabilities Deposits Borrowing from CBZ Total Liabilities 1400 200 1600 Assume that 1) households hold no currency and 2) banks hold no excess reserves. The current reserve requirement is 10%. The Central Bank of Zargadee (CBZ) uses the three traditional tools to perform monetary policy in an economy that is reserve constrained. a. Under our assumptions, what is the money multiplier? For each part (b)-(d) below, i) Conceptually explain the effect of the policy on the money supply. ii) Calculate the change in M1 given our assumptions. iii) Construct the new balance sheet of the consolidated banking system of Zargadee under the new policy. iv) When the money supply changes, list a chain of events to…
9. Bank leverage Use the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions. Assets Reserves Loans Bank's Balance Sheet $150 Liabilities and Owners' Equity $1,200 Deposits $600 Debt Securities $750 Capital (owners' equity) $200 $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 Which of the following is true of the capital requirement? Check all that apply. The higher the percentage of assets a bank holds as loans, the higher the capital requirement. It specifies a minimum leverage ratio for all banks. Its intended goal is to protect the interests of those who hold equity in the bank.
Consider the relative liquidity of the following assets: Assets 1. A bond issued by a publicly traded company 2. The funds in a savings account 3. A $1 bill 4. Your condo Select the assets in order of their liquidity, from most liquid to least liquid. Most Liquid Second-Most Liquid Third-Most Liquid Least Liquid Asset
Use the information given in North Central National Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at North Central National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and account. the This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base The return on each asset The total value of liabilities
22. Which of the following entries would appear on the liabilities side of a commercial bank's balance sheet? Government of Canada securities demand deposits cash reserves mortgage loans foreign currency reserves
Coin Bank has deposits of $350 million. It holds reserves of $30 million and government bonds worth $70 million. If the bank sells its loans at market value of $400 million, what will its total assets equal? $500 million $750 million $450 million $380 million
11. Please answer the table only. The columns specifically.
QUESTION 24 LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET ASSETS LIABILITIES & NET WORTH $900,000 $100,000 $300,000 $3,700,000 $2.000.000 cash in the vault: demand deposits: $5,000,000 deposits at Fed US treasury bonds: loans: Building: capital stock: $2,000,000 TOTALS: $7,000,000 TOTALS: $7,000,000 24. Given a reserve requirement ratio of 10%, what will be the maximum effect on quantity of money in circulation of a Federal Reserve sale of $100,000 worth of government securities directly to a bank? an increase of $100,000 a decrease of $1,000,000 a decrease of $100,000 an increase of $1,000,000
Table 14.1: FIRST COMMERCIAL BANK Asset Liabilities Total Reserves: $150,000 $100,000 $1,000,000 $200,000 Deposits Net Worth Required Reserves Excess Reserves ? ? Loans $1,200,000 Total $1,200,000 Total 13. Refer to Table 13. 1. First Commercial bank's excess reserves equal $ a) 150,000 b) 250,000 c) 100,000 d) 50,000