Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help me!!!!!!!!!!!!!!!!!!! 8. 15 points. T account problem. Suppose a bank has the following balance sheet. Assume there are no capital requirements, but that

please help me!!!!!!!!!!!!!!!!!!!

image text in transcribed
8. 15 points. T account problem. Suppose a bank has the following balance sheet. Assume there are no capital requirements, but that there is a 20% reserve requirement. (15 points). Show calculations of required and excess reserves when answering Assets Liabilities Reserves 110M Deposits 445M Loans 340M Bank Capital 55M Securities 50M A) If the bank experiences a deposit withdrawal of $20 million, what happens to its balance sheet at first in terms of the items listed above? In the above table cross out the amounts that change and write in the new balance sheet number. Does the bank have sufficient reserves to meet the reserve requirement? If not, name one plausible action it can take to meet the requirement. B) Suppose the bank experiences an additional deposit withdrawal of $20 million on top of what happened in (a), what does its balance sheet look like immediately after the second withdrawal? Draw a new balance sheet below with the items listed and the new amounts. Put in the levels of each balance sheet item (that is list the amount of reserves, loans, securities, deposits, and bank capital. Does the bank have sufficient reserves to meet the reserve requirement? If not, calculate by how much and name one plausible action it can take to meet the requirement

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Financial Accounting and Reporting a Global Perspective

Authors: Michel Lebas, Herve Stolowy, Yuan Ding

4th edition

978-1408076866

Students also viewed these Economics questions