The following table shows the balance sheet for Blue Harbor Bank. Compute the value of the bank's capital and enter it in the balance sheet. Then Balance sheet of Blue Harbor Bank as of January 4, 2021 Assets Liabilities Reserves Securities Loans Total $150,000 Checkable deposits $1,200,000 $4,300,000 Bank's capital (net worth) $5,650,000 Total the ha $5,250,000 $5,650,000 Suppose that Dina, a borrower of Blue Harbor Bank, defaults on a $375,000 loar the loans outstanding portion of the bank's balance sheet, and i
The following table shows the balance sheet for Blue Harbor Bank. Compute the value of the bank's capital and enter it in the balance sheet. Then Balance sheet of Blue Harbor Bank as of January 4, 2021 Assets Liabilities Reserves Securities Loans Total $150,000 Checkable deposits $1,200,000 $4,300,000 Bank's capital (net worth) $5,650,000 Total the ha $5,250,000 $5,650,000 Suppose that Dina, a borrower of Blue Harbor Bank, defaults on a $375,000 loar the loans outstanding portion of the bank's balance sheet, and i
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter27: Money And Banking
Section: Chapter Questions
Problem 16RQ: How can a bank end up with negative net worth?
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Transcribed Image Text:The following table shows the balance sheet for Blue Harbor Bank.
Compute the value of the bank's capital and enter it in the balance sheet. Then answer the question that follows.
Reserves
Balance sheet of Blue Harbor Bank as of January 4, 2021
Liabilities
Loans
Securities
Total
Assets
$150,000
$1,200,000
$4,300,000
$5,650,000
Checkable deposits
Bank's capital (net worth)
Total
$
$5,250,000
$5,650,000
Suppose that Dina, a borrower of Blue Harbor Bank, defaults on a $375,000 loan, and the collateral offered to get the loan is worthless. This will
the loans outstanding portion of the bank's balance sheet, and it will
the bank's capital to $
In this
situation, the bank is
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