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That same bank raises $100 in deposits and pays them an interest rate of 1% per year. The bank now has $200 in assets, $100

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That same bank raises $100 in deposits and pays them an interest rate of 1% per year. The bank now has $200 in assets, $100 in liabilities, and $100 in net worth. Suppose that the bank doesn't have to hold any reserves and that assets earn 3% per year. How much is this bank earning on its bank capital? By what percentage must the value of the bank's assets decline so that its bank capital was $0

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