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In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. NIM=Profit/Interest revenue   Bank A Loan 7%                              $90 G-Bond   5%                             ? Deposits    5%                             $70 Equity                                           $40 Total Assets                       $? Total Equity and Deposit        $110 The amount of G-bond is       $50         $70         $20       $40         $80         $60         $30       $10

In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. NIM=Profit/Interest revenue   Bank A Loan 7%                              $90 G-Bond   5%                             ? Deposits    5%                             $70 Equity                                           $40 Total Assets                       $? Total Equity and Deposit        $110 The amount of G-bond is       $50         $70         $20       $40         $80         $60         $30       $10

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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  • In the example below, we will use year-end assets.

Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment.

NIM=Profit/Interest revenue

 

Bank A

Loan 7%                              $90

G-Bond   5%                             ?

Deposits    5%                             $70

Equity                                           $40

Total Assets                       $?

Total Equity and Deposit        $110

The amount of G-bond is

 
   

$50

 
 
   

$70

 
 
   

$20

 
   

$40

 
 
   

$80

 
 
   

$60

 
 
   

$30

 
   

$10

 
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