Assets Liabilities $($unit in million$)$

Reserves $$60$

Checkable deposits $$100$

Securities $50$

Nontransaction deposits $135$

Loans

$150$

Bank capital

$25$

Input your answers to the following questions in order to three input boxes. For example, the first input box is for your answer to question $1).$ And please provide steps for calculation.

Suppose disaster strikes the banks: borrower default on $$30$ of the loans. What problem will this bank deal with cause by loan defaults? Provide your reason.

What is the capital$-$to asset ratio $($or ER $)$ of this bank?

How does a bank raise capital$($Hint: two sources of bank capital$)?$

What is ROE? If a bank doubles the amount of its capital and ROA stays constant, what will happen to ROE$($Hint: ROE$=$ROA$/$ER $)?$

Thus based on your conclusion of $4),$ what are the benefits and costs for a bank when it decides to increase the amount of its bank capital?