Question 3 A bank has the following assets and liabilities: Mortgage Loans: $240 million Consumer Loans: $250 million Discount Loans: $25 million Demand Deposits: $400 million NOW Deposits: $100 million Treasuries: $25 million Municipal Bonds: $10 million a) The bank has 10% in required reserves and 8% in excess reserves. Calculate the bank capital and show the balance sheet of the bank. b) Assume that net profits after taxes are $6 million. Calculate ROA, ROE, EM, leverage ratio, and capital adequacy ratio. Is the bank in line with the capital requirements? c) If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, show the new balance sheet of the bank. d) Explain what actions the bank manager can take to fulfill the reserve requirements. Explain the costs involved in each action