se you are the sole shareholder of a bank with deposits of $1,200,000 and asset 1000.000. There is no reserve requirement. Your liability in the bank is limited to your investment (if it fails, you needn't make up losses to depositors). You l. Suppose 13 are risk neutral a. What is the net worth of the bank? ose you may reinvest your assets into one but only one of the following ects before the examiners audit your books Project A: pays a certain return of 7 percent Project B: has a 50 percent chance of a 21 percent net return and a 50 percent chance of a net return of -21 percent Project C: has a 10 percent chance of doubling your assets and a 90 percent chance of losing everything ank the three projects according to which will benefit you personally. would your ranking change if the assets of the bank were $1,200,000? c. How d. How would your ranking change if the assets of the bank were $2.000,000? e. If you have the chance to abscond with S100,000 at the cost of losing ownership nk, would you do it (setting aside questions of morality)? How does your in the ba answer depend on the net worth of the bank? f. If banks are covered by government deposit insurance, why should the government ake an active role in closing down failed banks as soon as they can be discovered? Answer with references to the examples in this exercise. se you are the sole shareholder of a bank with deposits of $1,200,000 and asset 1000.000. There is no reserve requirement. Your liability in the bank is limited to your investment (if it fails, you needn't make up losses to depositors). You l. Suppose 13 are risk neutral a. What is the net worth of the bank? ose you may reinvest your assets into one but only one of the following ects before the examiners audit your books Project A: pays a certain return of 7 percent Project B: has a 50 percent chance of a 21 percent net return and a 50 percent chance of a net return of -21 percent Project C: has a 10 percent chance of doubling your assets and a 90 percent chance of losing everything ank the three projects according to which will benefit you personally. would your ranking change if the assets of the bank were $1,200,000? c. How d. How would your ranking change if the assets of the bank were $2.000,000? e. If you have the chance to abscond with S100,000 at the cost of losing ownership nk, would you do it (setting aside questions of morality)? How does your in the ba answer depend on the net worth of the bank? f. If banks are covered by government deposit insurance, why should the government ake an active role in closing down failed banks as soon as they can be discovered? Answer with references to the examples in this exercise