Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please show all work Capital management. Initially, Bitterroot Regional Bank has the following assets $440 million in loans $10 million in securities and the following
Please show all work
Capital management. Initially, Bitterroot Regional Bank has the following assets $440 million in loans $10 million in securities and the following liabilities: $400 million in deposits $75 million in borrowed funds Use this information to answer the following questions: (a) (3 points) Suppose that Bitterroot Regional faces a 10% required reserve ratio and holds $10 million in excess reserves. What is the initial amount of equity capital for Bitterroot Regional? (b) (4 points) Prepare the balance sheet for Bitterroot Regional. Include all assets and liabilities listed above and the value for equity capital that you found for part (a). (c) (2 points) Holding everything else constant, what is the greatest loss that Bitterroot (d) (3 points) If Bitterroot Regional's net profit after taxes is S5 million, what is its return on assets (ROA)? What is Bitterroot Regional's return on equity (ROE)? Answer: (a) $25 million (b) The balance sheet for Bitterroot Regional: Assets Liabilities Reserves S50 mil. 400 Deposits Loans S Securities S10 mil.S25 mil Capital $440 mil.$75 mil Borrowings (c) $25 mil. (d) 20 percentStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started