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2. Consider the initial balance sheet of ABC Bank and answer the following questions: Assume that the reserve ratio of the bank is 10%. ABC

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2. Consider the initial balance sheet of ABC Bank and answer the following questions: Assume that the reserve ratio of the bank is 10%. ABC Bank Assets Liabilities Reserves: $1,000 Loan: 4,000 Investment: 11,000 Deposit: 10,000 Debt: 2,000 Capital: 4,000 Total 16,000 16,000 a) What is the initial leverage ratio of the bank? b) Because of a stock market crash the bank's investment value goes down by 10%. Re-write the bank's changed balance sheet and calculate its new leverage ratio. c) Calculate the percentage changes in the bank's total assets and capital

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