Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1.Based on the data, calculate and analyze the performance of the bank using: ROA, ROE, NIM, OE (Operating Expense), and Leverage. 2.Based on your calculation,
1.Based on the data, calculate and analyze the performance of the bank using: ROA, ROE, NIM, OE (Operating Expense), and Leverage.
2.Based on your calculation, give the conclusion and recommendation to the manager of bank for the setting policy.
Assume a highly stylized bank operates a balance sheet as follows: Assets $ Cash 1000 Reserves deposited in the central bank Liquid assets 1000 Safe, e.g. government securities Investment securities 1000 Risky, e.g. stocks, bonds Loans 6000 Risky, e.g. corporate loans, mortgages Fixed assets 1000 \"Tangible\Suppose in a fiscal year the bank earns $800 interest income from interest-bearing assets, i.e., assets that generate interest income, such as financial securities and loans in our example; . $500 non-interest income, or fee income from providing financial services; . $500 interest expenses, or, the bank's funding cost that is paid on its funding liabilities such as deposits and bonds; . $600 operating expenses on operating the bank's businessStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started