Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. The table below shows the balance sheet of a bank in millions of dollars.CashAssets (in millions)Commercial loansConsumer loansPrime mortgagesSubprime mortgagesTotal assets$8002,000600800500$4,700a. The bank's net worth is: $4600 million.Instructions: Enter your answers as a whole number.The bank's new net worth is: $Total assets are now: $million.Liabilities (in millions)$1,8001,5001,000CDsSavings accountsLong-term debtb. Assume housing prices increase and defaults on subprime mortgages rise, causing the bank's assets in subprime mortgages todecrease from $500 million to $350 million.million.Total liabilities$4,300c. Using the net worth calculated in part (a), by how much would the value of subprime mortgages have to fall for the bank to beinsolvent (that is, for liabilities to be greater than assets)?The value of subprime mortgages would have to fall bythan $million.

Bank regulation has a big impact on economic growth. Financially sound monetary service firms obtain…

The table below shows the balance sheet of a bank in millions of dollars. Assets (in millions) Cash Commercial loans Consumer loans. Prime mortgages Subprime mortgages Total assets $800 2,000 600 800 500 $4,700 The bank's new net worth is: $ Liabilities (in millions) $1,800 1,500 1,000 million. million. CDs Savings accounts Long-term debt Instructions: Enter your answers as a whole number. a. The bank's net worth is: $4600 million. b. Assume housing prices increase and defaults on subprime mortgages rise, causing the bank's assets in subprime mortgages to decrease from $500 million to $350 million. Total liabilities $4,300 Total assets are now: $ c. Using the net worth calculated in part (a), by how much would the value of subprime mortgages have to fall for the bank to be insolvent (that is, for liabilities to be greater than assets)? The value of subprime mortgages would have to fall by than $ million.

The table below shows the balance sheet of a bank in millions of dollars. Assets (in millions) Cash Commercial loans Consumer loans. Prime mortgages Subprime mortgages Total assets $800 2,000 600 800 500 $4,700 The bank's new net worth is: $ Liabilities (in millions) $1,800 1,500 1,000 million. million. CDs Savings accounts Long-term debt Instructions: Enter your answers as a whole number. a. The bank's net worth is: $4600 million. b. Assume housing prices increase and defaults on subprime mortgages rise, causing the bank's assets in subprime mortgages to decrease from $500 million to $350 million. Total liabilities $4,300 Total assets are now: $ c. Using the net worth calculated in part (a), by how much would the value of subprime mortgages have to fall for the bank to be insolvent (that is, for liabilities to be greater than assets)? The value of subprime mortgages would have to fall by than $ million.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.

The table below shows the balance sheet of a bank in millions of dollars.
Cash
Assets (in millions)
Commercial loans
Consumer loans
Prime mortgages
Subprime mortgages
Total assets
$800
2,000
600
800
500
$4,700
a. The bank's net worth is: $4600 million.
Instructions: Enter your answers as a whole number.
The bank's new net worth is: $
Total assets are now: $
million.
Liabilities (in millions)
$1,800
1,500
1,000
CDs
Savings accounts
Long-term debt
b. Assume housing prices increase and defaults on subprime mortgages rise, causing the bank's assets in subprime mortgages to
decrease from $500 million to $350 million.
million.
Total liabilities
$4,300
c. Using the net worth calculated in part (a), by how much would the value of subprime mortgages have to fall for the bank to be
insolvent (that is, for liabilities to be greater than assets)?
The value of subprime mortgages would have to fall by
than $
million.

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