Use a T accounts to illustrate the changes for the Bank of Canada and ABC banksIf the Bank of Canada conducts open market operation by selling $5M of bonds to the ABCBank. What will happen to the following and use a "T" to explaina. money base?b. Reserves for the Bank of Canada and ABC bank?

In the given question we are required to illustrate the changes for the Bank of Canada and ABC Bank…

Answered: Use a T accounts to illustrate the…

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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Calculate bank’s ratio of Tier 1 capital to risk-weighted-assets and total capital to risk-weighted-assets under the terms of Basel 1 Agreement by using the following information. On Balance Sheet Items (Assets) Amount $ Cash 4,000,000 U.S Treasury securities 30,600,000 Deposit balances due from other banks 4,000,000 Loans secured by first liens on residential property (1-4 family dwellings) 66,000,000 Loans to corporations 105,300,000 Off Balance Sheet Items Standby letters of credit backing municipal bond 20,500,000 Long term unused loan commitments to corporate customers 25,500,000 Tier 1 capital 7,500,000 Tier 2 capital 5,800,000
The interest rate at which chartered banks can borrow from the Bank of Canada is the 1) preferred rate. 2) prime rate. 3) prime plus 1 percent. 4) bank rate.
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 40Deposits 215Loans 160 Securities 40Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
Use the Table below to answer this question (Table: Bank Balance Sheet) Based on the table, what is the leverage ratio at the bank? Bank Balance Sheet Assets Reserves $10,000 Deposits $100,000 Loans Securities 40,000 10 05 100,000 4.67 Liabilities & Net Worth Debt 20,000 Equity 30,000
Q2: How do banks make money? By issuing new currencies into the market. By charging interests to depositors who deposit their money in the bank. By issuing licenses to foreign banks who want to operate in Singapore. By charging fees for various services such as Credit Card annual fee, loan interest rates, late payment fees. Q3: Which of the following statements accurately describes simple interest? Simple interest is the interest calculated on the principal amount, the accumulated interest, and the time period of the investment. Simple interest is the interest calculated on both the principal and the accumulated interest. Simple interest is the interest calculated only on the principal amount. Simple interest is the interest calculated on the principal amount and the time period of the investment. Q4: What is the difference between a debit card and a credit card? A debit card charges interest on purchases, while a credit card doesn't. A debit card allows you to spend money you…
Which of the following is (are) correct statement(s) To increase reserves in the banking system on temporary basis, the Bank of Canada engages in a repurchase agreement (Repos or SPRAs) The upper limit of the operating band is called Bank rate The Bank of Canada uses SPRAs to lower the overnight rate and SRAs to raise the overnight rate. all of the above Only a and b above The monetary policy tools used by the Bank of Canada include are open market operations Shifting of government deposits to Chartered banks Changing the reserve requirements all of the above Only a and c above The Monetary Base of the Bank of Canada includes government securities and discount loans currency in circulation and reserves of the chartered banks government securities and reserves currency in circulation and discount loans

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Use a T accounts to illustrate the changes for the Bank of Canada and ABC banks If the Bank of Canada conducts open market operation by selling $5M of bonds to the ABC Bank. What will happen to the following and use a "T" to explain a. money base? b. Reserves for the Bank of Canada and ABC bank?