Describe the checkable deposits in excess

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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. Assets: Rerserves $15.9 Loans $150.0 Securities $34.1 Total $200.00 Liabilities and Capital: Transaction deposits $180.0 Equity Capital $20.0 Total $200.0

A) Calculate the banks excess reserves

B) Suppose that the bank sells $5 million in securities to get new cash. Show the banks balance sheet after this transaction. What are the banks excess reserves.

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

D) Now suppose that the customer spends the proceeds of the loan. Show the banks balance sheet, and calculate its excess reserves

Reference no: EM13214482

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