13.DodgeBank has the following items on its balance sheet£10m loans to corporations£5m loans to households£15m invested in government bonds£30m retail current account deposits (deposits by general public with DodgeBank)£5m commercial current account deposits (deposits by companies with DodgeBank)£10m tangible assets and property£ 5m cash in vaults£ 5m reserve deposits with Bank of England (deposits by Dodgebank)£10 borrowing by DodgeBank in money marketa) Construct a balance sheet for DodgeBank with each of the above items included.b) Calculate DodgeBank's net worth and show where it appears on the balance sheet.c) Which of DodgeBank balance sheet items should be included in a standard definitionof "bank money"?d) DodgeBank makes a personal loan of £10,000 to Ms Take, and credits her currentaccount with the amount of the loan. Describe the initial impact on DodgeBank'sbalance sheet, the money supply, and the net worth of both DodgeBank and Ms Take.e) Ms Take then withdraws £10,000 in cash and buys a second hand car from Mr Eyuswho immediately deposits it in his current account with another bank, RunBank. Whatis the impact on DodgeBank's balance sheet, and on the aggregate money supply?f) How would your answer change if Ms Take had paid by debit card?

A balance sheet refers to the form of a financial document that reflects the position of a company…

Answered: DodgeBank has the following items on…

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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The following table contains balance sheet information for Dual bank. All assets and liabilities are currently priced at par. Assets Commercial bills T-notes T-bonds Loans Amount (Smillion) Duration 900 400 (?) 700 Liabilities 0.5 Deposits 0.9 Federal Funds 2 0.7 Amount (Smillion) Duration 500 500 2 If the financial institution has instead invested $400 million on the T- bonds, what would be the impact on the firms' market value of equity if the entire yield curve shifts upward by 30 basis points [i.e., DR/(1+R) = 0.0030]?
what is the maximum amount of loans that the Second National Bank can make if it holds only the required reserves?
What is double entry for the following transaction: Started business with MK20,0000 in bank
Risk Weight Bank Liabilities $ Bank Assets Cash and Treasury Securities Repurchase Agreements Municipal Bonds Single Family Home Mortgages $ 2,700 CMOS Commercial Loans Agricultural Loans Allowance for Loan Loss Bank Buildings Total $ 2,000 $ 1,000 $ 1,500 0% Deposits 20% Hot Money 20% Subordinated Debt 8,000 2$ 6,000 24 250 50% Common Stock 2$ 100 $ 2,500 $ 1,500 $ 2,100 $ (300) $ 2,000 $ 15,000 50% Surplus 100% Retained Earnings 2$ 300 2$ 350 100% 0% 100% 2$ 15,000 1. Calculate the minimum leverage capital for this bank.
Calculate bank’s ratio of Tier 1 capital to risk-weighted-assets and total capital to risk-weighted-assets under the terms of Basel 1 Agreement by using the following information. On Balance Sheet Items (Assets) Amount $ Cash 4,000,000 U.S Treasury securities 30,600,000 Deposit balances due from other banks 4,000,000 Loans secured by first liens on residential property (1-4 family dwellings) 66,000,000 Loans to corporations 105,300,000 Off Balance Sheet Items Standby letters of credit backing municipal bond 20,500,000 Long term unused loan commitments to corporate customers 25,500,000 Tier 1 capital 7,500,000 Tier 2 capital 5,800,000
5
Match up the following statements and answers. An answer may be used more than once. Whose liabilities are bank notes held by the general public? Choose... Whose assets are reserves with the central bank? Choose... For households a home mortgage is a Choose... for commercial banks a home mortgage is a Choose... for commercial banks a deposit held by the general public Choose... is a for a corporation a bank loan is a Choose... an example of a household's tangible assets is a Choose... if I borrow money using my house as collateral this is a v Choose... mortgage, an asset of a commercial bank the central bank liability house asset mortgage, a liability of a commercial bank commercial banks
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
QUESTION #1 Populate the following “T-accounts” with the following data, please make sure where double entry is required $100 million in mortgage-backed securities (MBS) $200 million demand deposits $20 million in reserves held by banks $100 million in Treasury securities held by banks $50 million in Treasury securities held by the Fed $5 million in overnight borrowing by banks from the Fed Households Banks Federal Reserve Treasury ___A_______L___ ___A_______L___ ___A_____L___ ___A_____L___

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