Question:

1) Consider the following balance sheet for the First National Bank (M stands for millions of dollars; assume the bank holds no assets or liabilities except for those listed):

Assets	Liabilities
Reserves $20M Bonds $15M Loans $215M	Checking Deposits $200M NET WORTH ?

Assume that the reserve requirement (R) is 5%.

1a. Find the bank's net worth (also known as "bank capital"). Show your work and formula.

1b.Find E, the percentage of deposits that the bank is holding as "excess reserves." Show your work and formula.

1c.If $100M worth of the bank's loans default, show the bank's balance sheet immediatelyafterthe default. Assume nothing has been done to try to offset the default.