Assume a highly stylized bank operates a balance sheet as follows: Assets $ Cash 1000 Reserves deposited in the central bank Liquid assets 1000 Safe, e.g. government securities Investment securities 1000 Risky, e.g. stocks, bonds Loans 6000 Risky, e.g. corporate loans, mortgages Fixed assets 1000 \"Tangible\Suppose in a fiscal year the bank earns $800 interest income from interest-bearing assets, i.e., assets that generate interest income, such as financial securities and loans in our example; . $500 non-interest income, or fee income from providing financial services; . $500 interest expenses, or, the bank's funding cost that is paid on its funding liabilities such as deposits and bonds; . $600 operating expenses on operating the bank's business