Assume that the following banks have the same net amount of 2 million, but they are different due to the capital structure: Bank Alpha Reserves 12 million Deposits 85 million Loans 90 million Bank Capital 17 million TOTAL Assets 102 million TOTAL Liabilities and Equity 102 million Bank Beta Reserves 12 million Deposits 100 million Loans 90 million Bank Capital 2 million TOTAL Assets 102 million TOTAL Liabilities and Equity 102 million Which Bank is more attractive for shareholders? [Hints: Calculate the ROE]

Assume that the following banks have the same net amount of 2 million, but they are different due to the capital structure: Bank Alpha Reserves 12 million Deposits 85 million Loans 90 million Bank Capital 17 million TOTAL Assets 102 million TOTAL Liabilities and Equity 102 million Bank Beta Reserves 12 million Deposits 100 million Loans 90 million Bank Capital 2 million TOTAL Assets 102 million TOTAL Liabilities and Equity 102 million Which Bank is more attractive for shareholders? [Hints: Calculate the ROE]

Name: Question 8 Assume that the following banks have the same net amount of
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Description: Question 8 Assume that the following banks have the same net amount of 2 million, but they are different due to the capital structure: Bank Alpha Reserves 12 million Deposits 85 million Loans 90 million Bank Capital 17 million TOTAL Assets 102 millio

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 1bM

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