Question
Brenda Olivia Adams starts her own bank, called BOA. As owner, Brenda puts in $3000 of her own money. BOA then borrows $2000 in a
Brenda Olivia Adams starts her own bank, called BOA. As owner, Brenda puts in $3000 of her own money. BOA then borrows $2000 in a longterm loan from Brendas roommate, accepts $7500 in demand deposits from her neighbors, buys $1000 of corporate bonds, lends $8000 to local businesses to finance new investments, and keeps the remainder of the banks assets as reserves at the Fed. b. Now assume an economic downturn causes 15 percent of the local businesses to declare bankruptcy and default on their loans. Calculate the new values for loans, capital, total assets, and total liabilities as a result of the bankruptcies. New value of loans $ New value of capital $ Total assets $ Total liabilities $ The percentage decline in value of assets is % The percentage decline in value of capital is?
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