Consider a bank with the following balance sheet: Assets Required reserves Excess reserves Loans $10 $24 $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 $29 million in bank capital. As that 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 As a result, $25 million in deposits is withdrawn.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 Was the capital injection enough to stabilize the bank? The bank now has a capital ratio of %, and the bank is Liabilities Checkable deposits Bank capital million million million $120 million - $16 million Liabilities Checkable deposits $ Bank capital $ million million (Round your response to one decimal place.)
Consider a bank with the following balance sheet: Assets Required reserves Excess reserves Loans $10 $24 $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 $29 million in bank capital. As that 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 As a result, $25 million in deposits is withdrawn.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 Was the capital injection enough to stabilize the bank? The bank now has a capital ratio of %, and the bank is Liabilities Checkable deposits Bank capital million million million $120 million - $16 million Liabilities Checkable deposits $ Bank capital $ million million (Round your response to one decimal place.)
Chapter17: The Management Of Cash And Marketable Securities
Section: Chapter Questions
Problem 2P
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