1)Oldhat Commercial Bank started its first day of operations with $9,000,000 in capital and the following transactions:

• Received $130,000,000 in checkable deposits
• Issued 200 standard 30-year mortgages, fixed-rate with a nominal annual rate of 5.25% each for $250,000
• Issued $250,000,000 commercial loan: 3-year loan, simple interest paid monthly at 0.75%/month

a) If required reserves are 8%, prepare the bank's balance sheet assuming that the bank does not keep excess reserve. (explain in details about how the values have been derived)

b) The next day, very negative news hits the mortgage markets, and mortgage rates jump to 13%.

• What is the market value of Oldhat's mortgages? (Justify in details)
• What is Oldhat's "market value" capital ratio? (Show detail calculations)