Bank A just received total deposit equal to $30,700,000.00. Required reserve ratio for the banking system is set at 2.1%, (or 0.021). a. How much of the total deposit can bank A lend out? In other words, what is bank A's excess reserve? $ b. By how much will total money supply change if bank A, and all subsequent banks, are able to lend out their entire excess reserves as the result of the initial $30,700,000.00 deposit in bank A? $

Bank A just received total deposit equal to $30,700,000.00. Required reserve ratio for the banking system is set at 2.1%, (or 0.021). a. How much of the total deposit can bank A lend out? In other words, what is bank A's excess reserve? $ b. By how much will total money supply change if bank A, and all subsequent banks, are able to lend out their entire excess reserves as the result of the initial $30,700,000.00 deposit in bank A? $

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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Assets Reserves Desired Excess Loans Securities Total Assets ($000s) Liabilities 40,000 Deposits 11,200 300,000 60,000 400,000 Advances from Bank of Canada Borrowings Capital Total Liabilities ($000s) 280,000 0 55,000 65,000 400,000
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 their money 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.
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5. Suppose that you have local currency equivalents of the following accounts: Savings account $10,000 • Current Account $10,000 • CD (one year maturity) $15,000 • CD (five year maturity) $17,500 plus the following foreign currency accounts: • $10,000 • £10,000 Suppose the bank fails. How much can you expect to recover/to lose from deposit insurance given deposit insurance in the jurisdictions in which you have been assigned? What percent did you, as the depositor, actually recovery of the total sums that were deposited at the failed bank (with all foreign currency accounts converted into the relevant local currency)?
Suppose the Royal Bank of Pullman has the following assets: cash = 100 (with modified duration of 0) and a 10-year loan worth $900 (with modified duration of 9). Its liabilities are a CD worth $800 (with a modified duration of 2). If interest rates rise by 1% the bank's equity will fall by ________ %. A. 9 B. 5.6 C. 2 D. 6.5
A new bank has vault cash of $2 million and $6 million in deposits held at its Federal Reserve District Bank.If the required reserves ratio is 9 percent, what dollar amount of deposits can the bank have?
Suppose that the assets of a bank consist of $100 million of loans of BBB-rated corporations. The PD for the corporations is estimated as 1%. The average maturity is five years and the LGD is 60%. What is the total risk-weighted assets for credit risk under the Basel II advanced IRB approach? Question 5Answer a. $178.1 million b. $13.2 million c. $165.4 million d. $100 million
Consider the accompanying balance sheet for a Canadian chartered bank. If an additional $1,000,000 is deposited into the bank, then the amount of new loans (beyond its existing loans) that this chartered bank could make would be $. (Enter your response as a whole number.) Assets ($000s) Liabilities Reserves 65,000 Deposits ($000s) 370,000 Desired 18,500 Advances from 0 Bank of Canada Excess Borrowings 65,000 Loans Securities 385,000 Capital 95,000 80,000 Total Assets 530,000 Total Liabilities 530,000
13. If a bank has $4,000 of checkable deposits (DD), $3,000 in loans, and a required reserve ratio (rT) of 10 percent. The bank's excess reserves are A) $1,000. DD= 400o 3000 = 1oans B) $600. C) $1,400 D) $3,400
The Central Bank requires banks to maintain a 10% legal minimum reserve requirement of their deposits. Bank A with total deposits of $100 million isfully loaned up. This means that Bank A has excess reserves of A. 0 B. $10 million C. $1,000 million
We have the following information about a bank's balance sheet. Rate sensitive assets = $10,000,000 Fixed-rate assets = $20,000,000 Rate sensitive liabilities = $4,000,000 Fixed-rate liabilities = $26,000,000 Let's do a simple gap analysis. If the interest rate falls by 5 percent, O a. The bank will lose $300,000. O b. The bank will lose $500,000. O c. The bank will lose $200,000. O d. The bank will gain $300,000. O e. The bank will gain $200,000.
Q2) Suppose $150 of currency is in circulation. What is the banks’ impact on money supply?Calculate the money supply in case of Fractional reserve banking system. Pretend the Reserve Ratio is by 2.5%. 1. Borrowers first withdrew the loan from 1st National Bank and deposited it in 2nd National Bank. 2. Borrowers Took The Loan from 2nd National Bank and Deposited it in 3rd National Bank 3. Then Borrowers withdrew finally the loan from 3rd National Bank and deposited it in 4th National Bank. Questions: A. Open a T Account for each Bank with the previous situations. B. Show the Impact on money supply (How much the $150 of reserves had generated?)

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