Financial accounting questions Suppose that a commercial bank has $100million of assets and that its capital consistsof $10 million of equity. In addition, thebank's return on assets is 1%. Calculate thereturn on equity (ROE) for this bank.

Points to consider:Return on Assets (ROA): This measures how efficiently a bank uses its assets to…

Answered: Suppose that a commercial bank has $100…

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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A bank has earning assets of $100 million including $30 million of securities that pay an interest rate of 3%, and $70 million of loans that pay an interest rate of 6% financed by $100 million of deposits paying an interest rate of 3%. What is the bank's Net Interest Margin (NIM)?
Lambrook Bank has the following assets and liabilities: Asset A has a maturity of 4 years and a market value of $600,000 and asset B has a maturity of 6 years and a market value of $800,000. Liability X has a maturity of 2 years and a market value of $200,000 and liability Y has a maturity of 5 years and a market value of $300,000. What is the maturity gap of the bank? . .
Imagine that a given investment bank generated a return on assets of 10% which lead to a doubling of bank capital. What was the asset to equity ratio in this bank? 0.5 10 5 1
Use the information given in Upper Midwest National Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The total value of liabilities The size of the monetary base The riskiness of each asset the
(c) A bank has 100 in assets and 60 in liabilities. Suppose assets pay on average 6% and liabilities cost 2%. What is the expected rate of return on capital? A. 4% B. 12% C. 8% D. -4%
PLEASE SOLVE
Ubu Bank has the following assets and liabilities : Asset X has a maturity of 3 years and a market value of $600,000 and asset Y has a maturity of 9 years and a market value of $500,000. Liability A has a maturity of 2 years and a market value of $700,000 and liability B has a maturity of 8 years and a market value of $700,000. What is the maturity gap of the bank ? Round your final answer to 2 decimal places. E.g. if the final answer is -3.59 years, type -3.59 in the answer box. If the final answer is 3.59 years, type 3.59 in the box .
Suppose you are the manager of a bank that has$15 million of fixed-rate assets, $30 million of ratesensitive assets, $25 million of fixed-rate liabilities,and $20 million of rate-sensitive liabilities. Conduct agap analysis for the bank, and show what will happento bank profits if interest rates rise by 5 percentagepoints. What actions could you take to reduce thebank’s interest-rate risk?
You manage a bank that has $500 million of fixed-rate assets, $600 million of rate-sensitive assets, $1000 million of fixed-rate liabilities, and $100 million of rate-sensitive liabilities. A. Do a gap analysis and show what will happen to bank profits if interest rates rise by 4%. Show your work. B. What happens to the bank’s profits if interest rates fall by 7%?
Answer the following questions regarding the balance sheet given below. Assume £1 = $1.40. a) Is this bank net short or net long? b) What is the net interest income (NII) if the value of the £ appreciates to $1.65? c) What is the net interest margin (NIM) if the value of the £ depreciates to $1.15? Liabilities and Equity $800M in USD $200M in GBP Assets $300M in USD $700M in GBP Country US UK Deposit Rate 6% 8% Lending Rate 7% 9%
Suppose that the assets of a bank consists of $100 million of loans to A rated corporations. The PD for the corporations is estimated as 0,1% and LGD is 60%. The average maturity is 2.5 years for corporate loans. What is RWA?.
Use the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions. Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and increase/decrease the capital/ debt/ deposit/ loans/ reserves account. This would also bring the leverage ratio from its initial value of 14/ 14.80/ 16.10/ 18.20 to a new value of 14/ 14.80/ 16.10/ 18.20 Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply. The size of the monetary base The total value of liabilities The return on each asset

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Suppose that a commercial bank has $100 million of assets and that its capital consists of $10 million of equity. In addition, the bank's return on assets is 1%. Calculate the return on equity (ROE) for this bank.