Consider a bank with the following balancesheet:Assets LiabilitiesRequired$10millionCheckable$120milliondepositsmillionBankcapitalreservesExcess $19million$16reservesLoans $75Assume that required reserves are 8%. Inorder to avoid insolvency, regulators decide toprovide the bank with $26 million in bankcapital. Assume that bad news aboutmortgages is featured in the local newspaper,causing a bank run. As a result, $25 million indeposits is withdrawn.AssetsmillionLiabilitiesmillionCheckable$95milliondepositsmillionBankсapitalRequired $8reservesExcess $22$10millionreserves$75million1) The bank now has a capital ratio ofand the bank isa) 9.5%; well-capitalizedb) 5.9%; well-capitalizedc) 9.5%; in a dire capital positiond) 5.9%; in a dire capital positionLoans 2) If the bank regulators decide that the bankneeds a capital ratio of 12% to prevent furtherruns on the bank, how much of an additionalcapital injection is required to reach the 12%capital ratio?a) $1 millionb) $2 millionc) $3 milliond) $4 million

Bank:- A bank is considered as the financial institution that have licenses to receive deposits and…

Consider a bank with the following balance sheet: Assets Liabilities Required$10 millionCheckable$120million deposits millionBank reserves Excess $19 million $16 reserves capital Loans $75 million Assume that required reserves are 8%. In order to avoid insolvency, regulators decide to provide the bank with $26 million in bank capital. Assume that bad news about mortgages is featured in the local newspaper, causing a bank run. As a result, $25 million in deposits is withdrawn. Assets Liabilities Required $8 millionCheckable$95million deposits millionBank reserves Excess $22 $10million reserves capital $75 million 1) The bank now has a capital ratio of and the bank is Loans a) 9.5%; well-capitalized b) 5.9%; well-capitalized c) 9.5%; in a dire capital position d) 5.9%; in a dire capital position

Consider a bank with the following balance sheet: Assets Liabilities Required$10 millionCheckable$120million deposits millionBank reserves Excess $19 million $16 reserves capital Loans $75 million Assume that required reserves are 8%. In order to avoid insolvency, regulators decide to provide the bank with $26 million in bank capital. Assume that bad news about mortgages is featured in the local newspaper, causing a bank run. As a result, $25 million in deposits is withdrawn. Assets Liabilities Required $8 millionCheckable$95million deposits millionBank reserves Excess $22 $10million reserves capital $75 million 1) The bank now has a capital ratio of and the bank is Loans a) 9.5%; well-capitalized b) 5.9%; well-capitalized c) 9.5%; in a dire capital position d) 5.9%; in a dire capital position

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

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...
A local bank policy is to hold 12.77% of its deposits as reserves. With current deposits of $8 million and excess reserves of $200,000, calculate the necessary reserve on a fresh deposit of $30,000. Required reserve for new deposit =$ (The answer should be rounded to Zero (0) decimals without the $ sign.)
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 40Deposits 215Loans 160 Securities 40Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
Find the attached file.
thempt 1 You just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all exces reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 12%, how much will your deposit increase the total value of checkable bank deposits? 0.14 Incamect If the reserve requirement is 4%, how much will your deposit increase the total value of checkable deposits? 0.04 $. Inomect Increasing the reserve requirement increases. the Incorect money supply.
Beleaguered State Bank (BSB) holds $200,000,000 in deposits and maintains a reserve ratio of 10%, which also is the reserve requirement. On paper, write the T account for BSB and use it to answer the rest of this question. Now suppose that BSB's largest depositor withdraws $10,000,000 from her account one day. On paper, show the effect of this on the T account. How many dollars of cash reserves does BSB need to raise to be allowed to open for business the next morning?
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
SETUP FOR QUESTIONS 6: Titan Bank is a community bank and its balance sheet is reported below.[1] The "total equity/total asset ratio" is 9.91 percent ($11.00/S120.00) and is defined as the capital ratio. Assume bank regulators require the capital ratio to be at least 8.00 percent at all times. If the capital ratio falls below 8.00 percent, the bank regulators immediately shut down the bank and fire the managers. Thus, the capital ratio is very important to the managers who are constantly evaluating "what if" scenarios to make sure they are not shut down. Use Titan Bank's balance sheet to evaluate the two scenarios described below. Balance Sheet (as of 12/31/2020 and in millions) Assets Liabilities Assets have a duration of 4.00 years and a Liabilities have a duration of 1.00 years and a yield to maturity of 3.00%. yield to maturity of 6.00%. Total Assets $111.00 Total Liabilities $100.00 Equity Total Equity $11.00 Scenario 2: Federal Reserve actions force an immediate non-parallel…
Please answer
Solve it correctly
Give typing answer with explanation and conclusion
Consider a bank with the following balance sheet: Assets Required reserves $10 Excess reserves $27 Loans $70 Required reserves Excess reserves Loans million million million $ $ $ Assume that required reserves are 8%. In order to avoid insolvency, regulators decide to provide the bank with $27 million in bank capital. Assume that bad news about mortgages is featured in the local newspaper, causing a bank run. As a result, $40 million in deposits is withdrawn. Show the effects of the capital injection and bank run on the balance sheet. (Round your responses to the nearest whole number.) Assets Liabilities Checkable deposits Bank capital million million million Liabilities $120 million - $13 million Checkable deposits Bank capital $ $ million million