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. Econoland Financial starts its first day of operations with $9 million in capital. A total of $130 million in checkable deposits is received. The
. Econoland Financial starts its first day of operations with $9 million in capital. A total of $130 million in checkable deposits is received. The bank makes a $25 million commercial loan and another $50 million in mortgages. Assume that required reserves are 8%. (a) What does the bank balance sheet look like? (b) How well capitalized is the bank? (c) Calculate the risk-weighted assets and risk-weighted capital ratio after Econolands first day assuming reserves risk weights are 0%, mortgages rates are 50% and commercial loan rates are 100%.
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