Consider the balance sheet for Inspired to Thrive (IT) Bank below:Inspired to Thrive BankBalance Sheetas at December 31, 2021AssetsSLiabilities and Owner's Equity275 Deposits1,105 Debts660 Owner's EquityReserves1,550.00Loans340.00Securities150.002,0402,040.00What is the leverage ratio of IT bank? Why is this ratio significant to the bank'soperation?

Leverage ratio = Debt to Equity Ratio = Debt/Equity Debt to Capital ratio = Debt/Total Capital Debt…

Answered: Consider the balance sheet for Inspired…

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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4. Gap and Duration Analysis Take the following balance sheet, which of the assets and labilities are rate-sensitive? Which assets and liabilities are not? a. Assets Value Liabilities Value Checkable Deposits Savings Deposits Money Market Accounts 40 Long-Term Loans Long-Term Securities 75 26 100 Reserves 54 10 Variable Rate CDs 25 Short-Term Securities Variable-rate Loans 15 30 Long-Term CDs 25 b. What is the estimated rate of change of bank profit, in terms of next year's interest rate, conditional on this year's interest rate being 2%? c. Suppose that all the long-term securities that the bank holds mature in 4 years and their interest rate will be 5% in that year. What is the approximate market-value of these long-term securities in 4 years given this year's interest rate is 2%?
Construct a bank balance sheet with the following items : reserves , deposits , loans , securities , capital , and debt . Choose values so that the reserve -deposit ratio is 10 percent and the leverage ratio is 10. Give an example of a change in asset values that would push bank capital to zero . What happens when bank capital is gone ?
What are bank assets used for? Bank liabilities are the sources of bank ________? Bank capital is the contribution of the bank's owners; it acts as a cushion against what? Banks make a profit for their owners. Measures of a bank's profitability include what four things? Banks' off-balance-sheet activities have become increasingly important in recent years. What are these two things? Banks face several types of risk in day-to-day business. List them:
The T-account below represents assets and liabilities for a bank. Use the T-account to calculate the bank's loans Loans Bonds Reserves Provide your answer below: million Assets ? $18 million $5 million Liabilities + Net Worth Deposits Net Worth $12 million $13 million
You observe the following details about a bank (amounts in million) net interest income: $1,250 net noninterest income: $200 operating expenses: $900 loan loss provisions: $170 gains from trading: $75 Taxes: $150 Total assets: $17,000 Equity: $2,200 What is the bank's ROE? Write your answer expressed as a %, and round to two decimals. For instance, if you think the ROE is 0.0856237, then you write 8.56 below
A bank has the following balance sheet. It expects a net deposit drain of $500,000. Assets Liabilities and Equity Cash $300,000 Deposits $3,115,000 Loans 2,000,000 Equity 385,000 Securities 1,200,000 Total Asset $3,500,000 Total Liabilities and Equity $3,500,000 What is a net deposit drain and why is it of concern for the bank? Show the bank’s balance sheet if it uses stored liquidity to offset the expected drain.
Below is the balance sheet for a bank. Under "Other" it has listed "$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)
Why are loans such a high percentage of total assets at the typical bank? What four broad classes of loans do banks engage in?
Which of the following are issued by large commercial banks that can be bought and sold among investors and carry a fixed interest rate? a. Eurodollar CD O b. Certificate of Deposits c. Commercial Papers d. Treasury Bills
Use the Table below to answer this question (Table: Bank Balance Sheet) Based on the table, what is the leverage ratio at the bank? Bank Balance Sheet Assets Reserves $10,000 Deposits $100,000 Loans Securities 40,000 10 05 100,000 4.67 Liabilities & Net Worth Debt 20,000 Equity 30,000
Suppose XYZ Bank reports interest-sensitive assets of $670 million and interest-sensitive liabilities of $875 million. What is the bank’s dollar interest-sensitive gap? Its relative interest-sensitive gap and interest-sensitivity ratio?
The following is the trail balance of Gulf Bank at 31/12/2022, Name of the account No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Cash and the balances at the central bank Other operating expenses Treasury bills Placement with the bank and other financial institutions Loan and advances Investments securities Investment in associates. Interest receivable and other assets Property and equipment Goodwill and other intangible assets Due to the banks and other financial institutions Borrowing under repurchase agreements Customer deposits Share capital Share premium Interest income Interest expenses Net fees and commission income Other income Staff expenses Depreciation, amortization, and equipment expenses TOTAL Debit BD millions 343.7 11.2 468.7 295 2975.5 1258.6 25 93.5 85 45.5 37.8 38.5 25 5703 Credit BD millions 650 120 3284.2 1418.7 11.4 173.3 24.8 20.6 5703 Requirements: Prepare the income statement and balance sheet of Gulf Bank on 31/12/2022?

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