Question
3) The bank you own has the following balance sheet: ASSETS LIABILITIES RESERVES $75 million Deposits $600 million LOANS $625 million Bank capital a) Whats
3) The bank you own has the following balance sheet:
| ASSETS | LIABILITIES |
| RESERVES $75 million | Deposits $600 million |
| LOANS $625 million | Bank capital |
a) Whats the amount of bank capital?
b) Suppose that the bank suffers a deposit outflow of $25 million. Show the new balance sheet.
c) Suppose the bank responds to the reserve deficiency by selling some of its loans. Show the new balance sheet. Assume the reserve requirement ratio is 10%.
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
IFRS 3rd edition
978-1118978085
