Use the information given in North Central National Bank's balance sheet to answer the following questions. Assets Reserves Loans Bank's Balance Sheet $150 $600 Liabilities and Owners' Equity $1,200 Deposits Debt Securities $750 Capital (owners' equity) $200 $100

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Chapter1: Making Economics Decisions
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Use the information given in North Central National Bank's balance sheet to answer the following questions.
Assets
Reserves
Loans
Securities
Bank's Balance Sheet
$150
$600
Liabilities and Owners' Equity
Deposits
$1,200
Debt
$750 Capital (owners' equity)
$200
$100
Suppose a new customer adds $100 to his account at North Central National Bank, which the owners of the bank then use to make $100 worth of new
loans. This would increase the loans account and
the
account.
This would also bring the leverage ratio from its initial value of
to a new value of
Which of the following statements regarding the capital requirement is true? Check all that apply.
The amount of capital required depends on the type of assets the bank holds.
It specifies a minimum leverage ratio for all banks.
Its intended goal is to protect the interests of those who hold equity in the bank.
Transcribed Image Text:Use the information given in North Central National Bank's balance sheet to answer the following questions. Assets Reserves Loans Securities Bank's Balance Sheet $150 $600 Liabilities and Owners' Equity Deposits $1,200 Debt $750 Capital (owners' equity) $200 $100 Suppose a new customer adds $100 to his account at North Central National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following statements regarding the capital requirement is true? Check all that apply. The amount of capital required depends on the type of assets the bank holds. It specifies a minimum leverage ratio for all banks. Its intended goal is to protect the interests of those who hold equity in the bank.
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