A. Bank A has the following balance sheet as at December 31 2021:

Reserves $50, loans $400m, Deposits $450m, securities $50, and Capital $50m.

a) List the above items in a T-account.

b) If the bank suffers a deposit outflow of $50 million with a desired reserve ratio of 10%. Reflect this outflow in an updated T account. Calculate the excess reserve, if any.

B. Bank B has the following balance sheet as at December 31 2021:

Reserves $110m, loans $500m, Deposits $610m, securities $100,and Capital $100m.

c) If a deposit outflow of $50 million occurs for Bank B, which bank would you rather have? Bank A or Bank B? explain

d) Assume that one of the clients of Bank A and Bank B declared bankruptcy and $60m of loans were wiped out. Show the change in the balance sheets of the two banks. Which Bank would you prefer? Explain