Consider a bank with the following balance sheet:AssetsRequired reservesExcess reservesLoans$10$24$70Required reservesExcess reservesLoansWas the capital injection enough to stabilize the bank?The bank now has a capital ratio of %, and the bank ismillionmillionmillionAssume that required reserves are 8%. In order to avoid insolvency, regulators decide to provide the bank with $29 million in bank capital. Assumethat bad news about mortgages is featured in the local newspaper, causing a bank run. As a result, $25 million in deposits is withdrawn.Show the effects of the capital injection and bank run on the balance sheet.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$$$LiabilitiesCheckable depositsBank capitalmillionmillionmillion$120 million- $16 millionLiabilitiesCheckable depositsBank capital$$millionmillionV. (Round your response to one decimal place.)

Old checkable deposits = $120 millionDeposits withdrawn = $25 million

Answered: Consider a bank with the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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17. Assume that a bank obtains most of its funds from long-term borrowed funds such as Federal Home Loan Bank borrowings. The bank's assets are in the form of loans with rates that adjust affected if interest rates every three months. In the next three months, the bank would be increase. A. negatively. B. favorably. C. unaffected.
Pixar Bank has the following balance sheet: Assets Cash 21,000 Liabilities and Equity Demand Deposits 550,000 Short-term Securities 369,000 Interbank Borrowed 151,000 Loans Total 400,000 Equity 790,000 Total 89,000 790,000 Pixar Bank's largest customer decides to exercise a $10,000 loan commitment. If the bank chooses to meet this loan commitment using purchased liquidity management techniques, which of the following correctly describes the balance in each account after the transaction? Select one: O a. Loans $410,000 and Funds Borrowed = $161,000 O b. Loans = $400,000 and Funds Borrowed = $161,000 О с. Loans $410,000 and Equity = $99,000 O d. None of the above e. Cash $11,000 and Loans = $410,000
Need answers for D. 1, D. 2, and D. 3
Consider the simple Financial Intermediary (FI) balance sheet as shown below (in millions of dollars). Before the withdrawal Cash Assets Corporate Loans Total Amount $30 $170 $200 Liabilities/Equity Amount Deposits Equity Total $170 $30 $200 Suppose that depositors unexpectedly withdraw $70 million in deposits and the FI receives no new deposits to replace them. Assume that the FI cannot borrow any more funds in the short-term money markets, and because it cannot wait to get better prices for its assets in the future (as it needs the cash now to meet immediate depositor withdrawals), the FI has to sell any nonliquid assets (corporate loans) at 75 cents on the dollar. What will be the equity (in millions of dollars) of the FI after adjustments are made for the $70 million of deposit withdrawals? Assume no minimum cash reserve requirements.
Am. 113.
A bank has $5 million in liquid assets and $95 million in nonliquid assets. Large depositors unexpectedly withdraw $9 million in deposits. To cover the withdrawals the bank sells all of its liquid assets at book value but must sell $7 million at less than their book value of their nonliquid assets to raise the additional funds needs. As a result the bank's equity will Fall $3 million Fall $4 million Fall $7 million Remain unchanged Rise $5 million
Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the Bank's EM?
The table shows the balance sheet of a banking system (aggregated over all banks) The desired reserve ratio on all deposits is 5 percent. There is no currency drain Assets Liabilities (millions of dollars) What is the quantity of loans and the quantity of total deposits when the banks have no excess reserves? Reserves at the Fed Cash in vault 25 Checkable deposits Savings deposits 100 20 100 >>> Answer to 2 decimal places Securities 65 Loans 90 The total quantity of loans after the banks have lent all their excess reserves is SOmilion. The total quantity of deposits after the banks have lent all their excess reserves is Smillion
Question 8 to Question 10 are based on the Balance Sheet information of Good Bank Bad Bank below: Good Bank: Cash Good loans Bad Loans Total Bad Bank: Cash Loans A) $1,500. B) $1,200. C) $380. $200 Deposits $1,000 Purchased funds $380 Equity D) $300. $1,580 $240 Bonds Total $240 Bad Bank buys the bad loans for $300. In order to finance the purchase of the bad loan from the Good Bank, the Bad Bank issues additional bonds in the amount of $60. What will be the total assets of Good Bank after the sale of the loans? E) None of the above. O Preferred stock Common stock $1,000 $300 $280 $1,580 $120 $40 $80 $240
A Bank has the following balance sheet (in millions), with the risk weights in parentheses. Liabilities and Equity Deposits $ 171 Subordinate debt (>5 years) S 8 Equity $ 16 Assets Cash (0%) $ 19 S 65 $ 115 ($ 4) $ 195. Total Liability and Equity $ 195 In addition, the bank has $30 million in commercial direct-credit substitute standby letters of Mortgage loans (50%) Consumer loans (100%) Reserve for loan losses Total Assets 3 credit to a public corporation and $30 million in 10-year FX forward contracts that are in the money by $2 million. a. What are the risk-adjusted on-balance-sheet assets of the bank as defined under the Basel III? b. What are the common equity Tier I (CET1) risk-based capital ratio, Tier I risk-based capital ratio, and the total risk-based capital ratio? c. Disregarding the capital conservation buffer, does the bank have sufficient capital to meet the Basel requirements?
5
Question: Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the bank's ROA?

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