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ABC Bank has the balance sheet below. Assume the required reserve ratio is 10%; the excess reserve ratio is 0; and the checkable deposit ratio

ABC Bank has the balance sheet below. Assume the required reserve ratio is 10%; the excess reserve ratio is 0; and the checkable deposit ratio is also 0. Also assume ABC Bank manages its assets and liabilities to earn the highest possible profit. List 3 different areas ABC Bank will manage to maximize profits and describe how ABC Bank will manage that particular area to maximize profits.

ABC Bank
Assets
Liabilities and Bank Capital
Reserves
$10 million
Checkable Deposits
$100 million
Rate Sensitive Assets
$100 million
Rate Sensitive Liabilities
$50 million
Long-Term Loans
$50 million

Long-Term Securities
$40 million
Bank Capital
$50 million

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