Show banks balance sheet, and calculate excess reserves

Reference no: EM13213777

The balance sheet of a bank follows. Suppose that the reserve requirement is 3 percent on the f rst $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 Liabilities + Capital Reserves $15.90 Transactions deposits $180.00 Loans $150.00 Equity capital $20.00 Securities $34.10 Total $200.00 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: EM13213777

Questions Cloud

Explain what is the molar mass of a covalent compound : What is the molar mass of a covalent compound if 0.486 g of it is dissolved in 25.0 mL of water and produces a freezing temperature

Determine the boundaries of the three stages of production : L Q MPL APL 1 3 +3 3 2 6 +3 6 3 16 -10 -5.33 4 29 -13 -7.25 5 43 -14 -8.6 6 55 -12 -9.17 7 58 -3 -8.29 8 60 2 7.5 9 59 -1 -6.56 10 56 -3 -5.6 b). plot the (i) total product, (ii) marginal product, (iii) average product functions.

How do we measure the risk : What type of risk do we adjust for, which of these risks should we be interested in and how do we measure the risk and incorporate it into the analysis.

How to predict the freezing point of a solution : Predict the freezing point of a solution of 10.0 g of carbon tetrachloride, CCl4, in 100.0 g of benezene, C6H6. For benezene

Show banks balance sheet, and calculate excess reserves : The balance sheet of a bank follows. Suppose that the reserve requirement is 3 percent on the f rst $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 d..

Compute the average molar mass of the sample : If a sample is composed of 39% of the lighter isotope (with the balance being 7Li), calculate the average molar mass of the sample.

Calculate the dividend yield and the capital-gains yield : A stock was priced at $150 per share at the end of 2007. The following table shows dividends per share paid during each year and the price of the stock at the end of the year for the following four years: Dividends Paid Stock Price at Year During ..

Discuss conflicting rankings of the two presses : Draw NPV profiles for the two replacement presses on the same set of axes, and discuss conflicting rankings of the two presses, if any, resulting from use of NPV and IRR decision techniques.

How to complete the reaction in a dinitration : Why can a first nitration be done at 0 degrees Celsius but the ice bath is removed to complete the reaction in a dinitration

User Account

All Pages