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Bank B, on the other hand, makes a $105 loan at 7%, with $100 in deposits at 5% and only $10 in equity. Bank B purchases the rest of Assets as G-Bond at 5% interest rate. Bank B Loan 7%                              $105 G-Bond 5%                                     ? Deposits    5%                             $100 Equity                                           $10 Total Assets                       $? Total Equity and Deposit        $110 compute ROE of Bank B=     38%     14%     13%     21%     26%     15%     16%     14%

Bank B, on the other hand, makes a $105 loan at 7%, with $100 in deposits at 5% and only $10 in equity. Bank B purchases the rest of Assets as G-Bond at 5% interest rate. Bank B Loan 7%                              $105 G-Bond 5%                                     ? Deposits    5%                             $100 Equity                                           $10 Total Assets                       $? Total Equity and Deposit        $110 compute ROE of Bank B=     38%     14%     13%     21%     26%     15%     16%     14%

Essentials Of Investments
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
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  • Bank B, on the other hand, makes a $105 loan at 7%, with $100 in deposits at 5% and only $10 in equity. Bank B purchases the rest of Assets as G-Bond at 5% interest rate.

Bank B

Loan 7%                              $105

G-Bond 5%                                     ?

Deposits    5%                             $100

Equity                                           $10

Total Assets                       $?

Total Equity and Deposit        $110

compute ROE of Bank B=

   

38%
   

14%
   

13%
   

21%
   

26%
   

15%
   

16%
   

14%
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