1. Consider a bank that has the following assets and liabilities:

• Loans of $100 million with a realized rate of 5%
• Security holdings of $50 million earning 10% interest income
• Reserves of $10 million
• Savings accounts of $100 million interest of 2.5%
• Checking deposits of $30 million which pay no interest

1. Determine Return On Equity for this bank.