Below is Econbank's balance sheet. Assets Liabilities and Owners' Equity Reserves $100 Deposits $800 Loans $600 Debt $280 Securities $500 Capital (owners' equity) $120 a. Calcualte the bank's total assets. b. Calculated the bank's total liabilities. c. Calculate the bank's reserve-deposit ratio. d. Calculate the bank's leverage ratio. e. If the value of the bank's securities rises by 24%, by what percentage does the bank assets rise? By what percentage does the bank capital rise? Draw the new balance sheet of the bank. f. How large a decline in the value of bank assets would it take to reduce the bank's capital to zero?
Below is Econbank's balance sheet. Assets Liabilities and Owners' Equity Reserves $100 Deposits $800 Loans $600 Debt $280 Securities $500 Capital (owners' equity) $120 a. Calcualte the bank's total assets. b. Calculated the bank's total liabilities. c. Calculate the bank's reserve-deposit ratio. d. Calculate the bank's leverage ratio. e. If the value of the bank's securities rises by 24%, by what percentage does the bank assets rise? By what percentage does the bank capital rise? Draw the new balance sheet of the bank. f. How large a decline in the value of bank assets would it take to reduce the bank's capital to zero?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Need help on part E and part F

Transcribed Image Text:Below is Econbank's balance sheet.
Assets
Liabilities and Owners' Equity
Reserves
$100
Deposits
$800
Loans
$600
Debt
$280
Securities
$500
Capital (owners' equity) $120
a. Calcualte the bank's total assets.
b. Calculated the bank's total liabilities.
c. Calculate the bank's reserve-deposit ratio.
d. Calculate the bank's leverage ratio.
e. If the value of the bank's securities rises by 24%, by what percentage does the bank assets rise? By what percentage does the bank capital rise?
Draw the new balance sheet of the bank.
f. How large a decline in the value of bank assets would it take to reduce the bank's capital to zero?
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