Q1. Considering the balance sheets of two banks, HC Bank and LC Bank, answer the following: a. Calculate the capital to total assets ratio of each bank. b. Which bank exhibits a more liquid asset structure? Explain. c. Over time, which bank likely will exhibit more variability in its deposits and reserves? d. Which bank would cause more concem to the banking regulatory authorities? HC (High Capital) Bank Assets (millions of dollars) Liabilities (millions of dollars) Cash assets 10 Demand deposits Short-term securities Savings deposits 13 Long-term bonds 25 Small time deposits 5 Loans 70 Capital accounts 10 Total assets 110 Total liabilities and capital accounts 110 80 8 30 Assets (millions of dollars) Cash assets Short-term securities Long-term bonds Loans Total assets LC (Low Capital) Bank Liabilities (millions of dollars) 20 Demand deposits 25 Savings deposits 25 Small time deposits 35 Capital accounts 105 Total liabilities and capital accounts 20 50 5 105 Q1. Considering the balance sheets of two banks, HC Bank and LC Bank, answer the following: a. Calculate the capital to total assets ratio of each bank. b. Which bank exhibits a more liquid asset structure? Explain. c. Over time, which bank likely will exhibit more variability in its deposits and reserves? d. Which bank would cause more concem to the banking regulatory authorities? HC (High Capital) Bank Assets (millions of dollars) Liabilities (millions of dollars) Cash assets 10 Demand deposits Short-term securities Savings deposits 13 Long-term bonds 25 Small time deposits 5 Loans 70 Capital accounts 10 Total assets 110 Total liabilities and capital accounts 110 80 8 30 Assets (millions of dollars) Cash assets Short-term securities Long-term bonds Loans Total assets LC (Low Capital) Bank Liabilities (millions of dollars) 20 Demand deposits 25 Savings deposits 25 Small time deposits 35 Capital accounts 105 Total liabilities and capital accounts 20 50 5 105