1. Imperial Bank has deposits of $150 million and securities of $110m; the bank also makes loans to its customers
   1. Suppose the bank makes bad loans to the tune of $5m, show and explain how the balance sheet will be altered. (5 points)
   2. Explain why regulators may or may not close the bank as a result of the bad loans. (5 points)
   3. Assuming that the net profit of the bank is $100m, what is the return on equity of the bank?
   4. Using the decompositions of the ROE, discuss the contributions of the equity multiplier and assets to the return on equity (ROE);
   5. alternatively, what is driving the return on equity?