10. Consider the following bank balance sheet a. Suppose interest rate on loans and securities is 10%, interest rate on deposits is 8%, and interest rate on excess reserves is 0%. What is the Bank's net return on assets? What is the return on equity? b. Suppose the risk weight on loans, securities, and reserves are 100\%, 0\%, and, 0\% respectively. Calculate the capital adequacy ratio (bank capital/risk weighted assets) of the bank. c. If the Banking authority imposes a minimum capital adequacy ratio of 15 percent, explain how the Bank can adjust the asset side of its balance sheet to meet this requirement. d. Now go back to the original balance sheet which is shown at the beginning of this question. How would the Bank's balance sheet change if the central bank adopts a reserve requirement (RR) of 10% on deposits? What would happen to Bank's profitability? (Assume the central bank does not pay interest to RR; that is, interest rate paid on RR is 0%) 10. Consider the following bank balance sheet a. Suppose interest rate on loans and securities is 10%, interest rate on deposits is 8%, and interest rate on excess reserves is 0%. What is the Bank's net return on assets? What is the return on equity? b. Suppose the risk weight on loans, securities, and reserves are 100\%, 0\%, and, 0\% respectively. Calculate the capital adequacy ratio (bank capital/risk weighted assets) of the bank. c. If the Banking authority imposes a minimum capital adequacy ratio of 15 percent, explain how the Bank can adjust the asset side of its balance sheet to meet this requirement. d. Now go back to the original balance sheet which is shown at the beginning of this question. How would the Bank's balance sheet change if the central bank adopts a reserve requirement (RR) of 10% on deposits? What would happen to Bank's profitability? (Assume the central bank does not pay interest to RR; that is, interest rate paid on RR is 0%)