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5. The balance sheets of two banks are given below: High Capital Bank Reserves Loans $ 80 million $ 420 million Deposits Capital $ 450
5. The balance sheets of two banks are given below: High Capital Bank Reserves Loans $ 80 million $ 420 million Deposits Capital $ 450 million $ 50 million Low Capital Bank Reserves Loans $ 80 million $ 420 million Deposits $475 million Capital $ 25 million Assume the net profits after taxes for both banks are $ 5 million, what are the ROA and ROE for the two banks? Which bank has a higher return for the equity owners? (8 points)
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