Define the balance sheet of a bank follows

Reference no: EM13214014

The balance sheet of a bank follows. Suppose that the reserve requirement is 3 percent on the first $30 million of checkable deposits and 10 percent on checkable deposits in excess of $30 million. (Amounts on the balance sheet are in millions of dollars.) Assets - Reserves $15.90 Loans $150.00 Securities $34.10 Total - $200.00 Liabilities + Capital - Transactions deposits $180.00 Equity capital $20.00 Total - $200.0

a. Calculate the bank's excess reserves.

b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. What are the bank's excess reserves?

c. Suppose that the bank makes a loan to a customer equal to the amount of its excess reserves from part b. Show the bank's balance sheet before the customer spends the proceeds of the loan. What are the bank's excess reserves?

d. Now suppose that the customer spends the proceeds of the loan. Show the bank's balance sheet, and calculate its excess reserves.

Reference no: EM13214014

Questions Cloud

Was the higher price caused by a change in demand : In the last month, the price of gasoline increased by 20%. Your job is to determine what caused the increase in price: a change in demand or change in supply. Ms. Info has all the numbers associated with the gasoline market and she can answer a si..

Church and state in post-revolutionary america : Which of the following statements most accurately characterizes the relationship between church and state in post-revolutionary America?

What does the increase in the quantity of housing reveal : When the price of a standard three bedroom house increases from $150,000 to $160,000 a building company increases its output from 20 houses per year to 21 houses per year. What does the increase in the quantity of housing reveal about the cost of ..

Gender-race and ethnicity have affected your behavior : How do you think gender, race, and ethnicity have affected your behavior?

Define the balance sheet of a bank follows : Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. What are the bank's excess reserves. Suppose that the bank makes a loan to a customer equal to the amount of its excess rese..

What are the three lines of physical defense : What are the three lines of physical defense? Are crime rates and people’s perspectives or fears a factor in assessing security needs?

Secession by tracing the history of their argument : Discuss how both the north and south defended their position on the question of secession by tracing the history of their argument?

What is the rate of return for the generator : A diesel generator for electric power can be purchased by the remote community for $480,000 and used for 10 years, when its salvaged value is$50,000. Alternatively, it can be leased for $70,000 a year.(Remember the lease payments occur at the star..

Describe the external appearances of the jovian planets : Describe the external appearances of the Jovian planets. Explain qualitatively why we see these different surface features.

User Account

All Pages