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MHM Bank currently has $650 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is increasing this requirement to 10 percent a. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 70 percent of these funds to MHM Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 85 percent of these funds to MHM Bank as transaction deposits.

MHM Bank currently has $650 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is increasing this requirement to 10 percent a. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 70 percent of these funds to MHM Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 85 percent of these funds to MHM Bank as transaction deposits.

FINANCIAL ACCOUNTING
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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solve only the B side please

Complete this question by entering your answers in the tabs below. Required A Required B Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 85 percent of these funds to MHM Bank as transaction deposits. (Enter your answers in millions. Do not round intermediate calculations. Round your "Panel 8" answers to 3 decimal places. (e.g., 32.161)) Panel A Initial Balance Sheets - Securities Loans Reserve deposits at Fed Securities Assets Loans Reserve deposits at Fed Assets Panel B: Balance Sheet after All Changes Os O Assets Assets Answer is complete but not entirely correct. 598 52 52 million Federal Reserve Bank $545.220 60,580 Reserve accounts MHM Bank million Transaction deposits million Federal Reserve Bank, S52.000 million Reserve accounts MHM Bank million Transaction deposits million < Required A Liabilities Liabilities Os Liabilities Liabilities Required B 52 milion 650 million 51.610 million $ 605 500 million
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required A Required B Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 85 percent of these funds to MHM Bank as transaction deposits. (Enter your answers in millions. Do not round intermediate calculations. Round your "Panel 8" answers to 3 decimal places. (e.g., 32.161)) Panel A Initial Balance Sheets - Securities Loans Reserve deposits at Fed Securities Assets Loans Reserve deposits at Fed Assets Panel B: Balance Sheet after All Changes Os O Assets Assets Answer is complete but not entirely correct. 598 52 52 million Federal Reserve Bank $545.220 60,580 Reserve accounts MHM Bank million Transaction deposits million Federal Reserve Bank, S52.000 million Reserve accounts MHM Bank million Transaction deposits million < Required A Liabilities Liabilities Os Liabilities Liabilities Required B 52 milion 650 million 51.610 million $ 605 500 million
MHM Bank currently has $650 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is increasing this requirement to 10 percent. a. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 70 percent of these funds to MHM Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 85 percent of these funds to MHM Bank as transaction deposits.
Transcribed Image Text:MHM Bank currently has $650 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is increasing this requirement to 10 percent. a. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 70 percent of these funds to MHM Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 85 percent of these funds to MHM Bank as transaction deposits.
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