A2-2. The Chinese central bank (PBOC) recently lowered its required reserve ratio for banks in China. If we assume that the initial balance sheet of the banking system is as shown below, and that everyone holds all theirmoney in the banking system, and that the reserve ratio is decreased from 10% to 5%, both loans and the money supply will increase by 1000. A2-2. The Chinese central bank (PBOC) recently lowered its required reserve ratio for banks in China. If weassume that the initial balance sheet of the banking system is as shown below, and that everyone holdsall their money in the banking system, and that the reserve ratio is decreased from 10% to 5%, bothloans and the money supply will increase by 1000.Assets:Liabilities:Reserves100 Deposits1000Government Bonds300Loans OutstandingTotal800 Capital2001200Total1200

A balance sheet is an essential financial statement that provides a snapshot of a company's…

Answered: A2-2. The Chinese central bank (PBOC)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Beleaguered State Bank (BSB) holds $400 million in deposits and maintains a reserve ratio of 10 percent. Complete the following T-account for BSB. Beleaguered State Bank Assets Liabilities Reserves 24 million Deposits 2$ million Loans $ million Now suppose that BSB's largest depositor withdraws $20 million in cash from her account. BSB decides to restore its reserve ratio by reducing the amount of loans outstanding. Complete BSB's new T-account after it has taken this action. Beleaguered State Bank Assets Liabilities Reserves 2$ million Deposits 24 million Loans 2$ million Because BSB is cutting back on its loans, other banks will find they have reserves, causing them to their loans.
Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, what is the bank's resulting reserve ratio (expressed as a %)? Using the information from the prior problem, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?
Suppose First Main Bank, Second Main Bank, and Third Main Bank all hold zero excess reserves. The required reserve ratio is 20%. Suppose that the Federal Reserve buys a government bond worth $1,500,000 from Jack, a client of First Main Bank. He immediately deposits the money into his checking account at First Main Bank. As a result of this transaction, the required reserves for First Main Bank will increase by $ type your answer... and its excess reserves will increase by $ type your answer...
The Fed conducts an open market operation and increase a bank's excess reserves by $7,000. Explain the first five rounds of the money creation process if the desired reserve ratio is 20% and if people keep no currency outside of the banking system. (5 points) Rounds Deposits Reserves Loans 1 $7,000 $1,400 $5,600 2 $5,600 $1,120 $4,480 345 $4,480 $896 $3,584 $3,584 $716.8 $2,867.2 $2,867.2 $573.44 $2,293.76
Commercial banks increase their reserves after the Fed increases the interest rate it pays on reserves. Which of the columns above could represent this action?
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Suppose the quotes for currencies in the three money centers are given as follows: At London center: 1GBP = 150 JPY At Tokyo center: 1USD = 115 JPY At New York center: 1USD = 0.86GBP An investor has 100,000 USD. Is there any opportunity for arbitrage? If yes, explain how does the investor use arbitrage to take advantage of these data? And how much could he or she earn from this?
A company plans to take $1000000 bank credit for 11 years while i=40%. After some negotiations, manager of the company convince the bank for i=38%. The decrease in interest rate result in a decrease in total debt. What is the approximate percantage of debt decrease? a. 10% O b. 20% O c. 15% O d. 8%
[Related to Solved Problem 11.13 Suppose that you intend to buy a house for $210,000. Calculate your bank leverage ratio for this investment in each of the following situations: You pay the entire $210,000 price in cash Bank leverage ratio is equal to

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