Assume that the following banks have the same net amount of 2 million, but they are different due to the capital structure:

Which Bank is more attractive for shareholders? Which bank is riskier in case of loan depreciation at 15 million? Show your calculations to support your suggestions.
The remaining questions relate to the first month’s operations of NewBank.

Transcribed Image Text:

BANK ALFA Reserves Loans Total Assets 12 million 90 million 102 million BANK BETA Reserves Loans Total Assets 12 million 90 million 102 million Deposits Bank Capital Total Liabilities and Equity Deposits Bank Capital Total Liabilities and Equity 85 million 17 million 102 million 100 million 2 million 102 million