Question 1. Oldhat Commercial Bank started its first day of operations with $9 million in capital and the following transactions:

• Received $130 million in checkable deposits
• Issued 200 standard 30-year mortgages, fixed-rate with a nominal annual rate of 5.25% each for $250,000
• Issued $250 million commercial loan: 3-year loan, simple interest paid monthly at 0.75%/month

a. If required reserves are 8%, prepare the bank's balance sheet assuming that the bank does not keep excess reserve.

b. The next day, very negative news hits the mortgage markets, and mortgage rates jump to 13%. What is the market value of Oldhat's mortgages? What is Oldhat's "market value" capital ratio?

Question 2. On January 1st., a mutual fund had the following assets and prices at 4:00 p.m.: