Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the current bank balance sheet and answer the following question. Please tell me how to find the returan on equity and the GAP, thanks

Consider the current bank balance sheet and answer the following question.

image text in transcribed

Please tell me how to find the returan on equity and the GAP, thanks a lot!

Consider the (partially completed) current bank balance sheet for Piggy Bank below: LIABILITIES ASSETS Thousands of Dollars (Thousands of Dollars) Vault Cash 140 Demand Deposits 6,400 Deposit w/ FED 680 Time Deposits 30,000 Securities 110,800 12,580 Loans Loans 120,600 other Assets 26,000 Equity cum sum Piggy Bank is earning 4.00 percent interest on its asset portfolio and is paying 3.5 percent interest or its financial liabilities. The (McCauley) duration of its assets is 5.2 and the duration of its financial liabilities is 4.14. Twenty five (25) percent of the bank's assets and seventy five percent of its financial liabilities are interest sensitive. The required reserve ratio for Demand Deposits is 5 percent and the required reserve ratio for Time Deposits is1 percent. The capital to asset ratio, K, for Piggy Bank is a) 0.075 b) 0.080 c) 0.085 d) 0.090 e) None of the above are correct. ne serve va cash t remme af Ted Return on Equity (ROE) for Piggy Bank's shareholders equals percent. a) 6.25 b) 7.50 c) 8.60 d) 9.75 e) None of the above are correct. route sensi the assets l iabi thousand dollars. Piggy Bank's GAP equals c) 64,800 d) 40,000 e) None of the above are correct. a) 80,000 b) 70,400 If interest rates rise by 25 basis points the change in Piggy Bank's net worth will be thousand dollars. a) 528.0 b) -400.0 c) o d) 400.0 e) 528.0 Seun ties Currently, Piggy Bank is holding thousand dollars in excess reserves. a) 0 b) 2 c) 400 d) e) None of the above are correct. 800 no John Taylor arpued that low interest rates which contributed to the housing and real estate boom aro

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Diversity In Library Collections

Authors: Rosalind Washington, Sarah Voels

1st Edition

1440878749, 978-1440878749

More Books

Students also viewed these Accounting questions

Question

In an (n, k) block ECC, what do n and k represent?

Answered: 1 week ago