Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

please provide explanantion and steps Brenda Olivia Adams starts her own bank, called BOA. As owner, Brenda puts in $2500 of her own money. BOA

please provide explanantion and steps image text in transcribed
image text in transcribed
image text in transcribed
Brenda Olivia Adams starts her own bank, called BOA. As owner, Brenda puts in $2500 of her own money. BOA then borrows $2500 in a long-term loan from Brenda's roommate, accepts $5500 in demand deposits from her neighbors, buys $1500 of corporate bonds, lends $5000 to local businesses to finance new investments, and keeps the remainder of the bank's assets as reserves at the Fed. b. Now assume an economic downturn causes 15 percent of the local businesses to declare bankruptcy and default on their loans. Calculate the new values for loans, capital, total assets, and total liabilities as a result of the bankruptcies. New value of loans $ 4250 New value of capital 250 Incorrect Total assets 8250 Total liabilities $ 8000 incorrect Incorrect New value of loans $ 4250 New value of capital $ 250 Incorrect Total assets $ 8250 Total liabilities $ 8000 Incorrect Incorrect The percentage decline in value of assets is 27.27 % Incorrect The percentage decline in value of capital is 90 % Incorrect The Monetary System - Work It Out: Question 2 In the economy of Robberia, the monetary base is $2450. People hold 50% of their money in the form of currency (and thus 50% as bank deposits). Banks hold 15% of their deposits in reserve. Throughout this question, enter all answers to THREE places after the decimal. c. In the face of this panic, the central bank wants to conduct an open-market operation to keep the money supply at its original level. Calculate, in dollars, how much the central bank needs to transact. The central bank sells worth of bonds

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

Students also viewed these Accounting questions