Homework Assignment #4 Money, Banking and Financial Markets 1) Assume that the reserve requirement ratio is 10%, and the minimum risk-weighted capitalization requirement is 8%. The balance sheet of the bank is given by the following: Assets Liabilities 10 200 Deposits: Borrowings 100 Cash in vault: Deposits at Fed: U.S. T-Bills Residential Mortgage loans Consumer loans 50 100 100 100 a) calculate total assets b) calculate total liabilities e) calculate bank capital d) calculate risk-weighted assets e) Calculate the capital-to-risk-weighted-assets ratio, and comment on its adequacy f) calculate excess reserves 2) Suppose the respective rates of interest on the assets and liabilities in the example above are given by the following: 5% T-Bills: Mortgages Consumer Loans Borrowings Other items 7% 8% 6% 0% a) calculate the "Return on Assets" b) calculate the "Return on Equity" c) calculate the leverage" Homework Assignment #4 Money, Banking and Financial Markets 1) Assume that the reserve requirement ratio is 10%, and the minimum risk-weighted capitalization requirement is 8%. The balance sheet of the bank is given by the following: Assets Liabilities 10 200 Deposits: Borrowings 100 Cash in vault: Deposits at Fed: U.S. T-Bills Residential Mortgage loans Consumer loans 50 100 100 100 a) calculate total assets b) calculate total liabilities e) calculate bank capital d) calculate risk-weighted assets e) Calculate the capital-to-risk-weighted-assets ratio, and comment on its adequacy f) calculate excess reserves 2) Suppose the respective rates of interest on the assets and liabilities in the example above are given by the following: 5% T-Bills: Mortgages Consumer Loans Borrowings Other items 7% 8% 6% 0% a) calculate the "Return on Assets" b) calculate the "Return on Equity" c) calculate the leverage