In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth

In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section: Chapter Questions

Problem 2WNG

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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 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
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7
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4) Smart Financial starts its first day of operations with $15 million in capital. A total of $130 million in checkable deposits is received. The bank makes a $25 million commercial loan and another $50 illion in mortgages with the following terms: 200 Page 1 of 2 standar 30-year, fixed rate mortgages with a nominal annual rate of 5.25%, each for $250,000. Assume that required reserves are 11%. a. What does the bank balance sheet look like? b. How well capitalized is the bank? Show the calculation. c. Calculate the risk-weighted assets and risk-weighted capital ratio after Smart Financial's first day.