The following is the balance sheet of the North Bank:

Assets	Liabilities
Vault money and ESA reserves 50mn	Deposits 650mn
Securities held 250mn	Securities issued 300mn
Advances 700mn	Capital

1) What are the equity reserves (that is, what is their value?), and what is the leverage ratio (A/E) of North Bank? (2 marks) 2) The North Bank makes a commercial loan of $2mn to a client. What is the immediate impact of this loan on its balance sheet? (That is, which items change, by how much, and to what new values?) (2 marks) 3) The client uses the loan to purchase equipment, from a supplier who banks with another deposit taking institution. When the funds are spent, what happens to the balance sheet of the North Bank? (That is, which items change, by how much, and to what new values?) (2 marks) 4) The client subsequently repays the loan, with 5% interest. When the repayment is made, what happens to the balance sheet of North Bank? (That is, which items change, by how much, and to what new values?) (2 marks) 5) Suppose that instead of repaying the loan, the client had defaulted. What would have been the implications of this for the balance sheet of the North Bank? (That is, which items change, by how much, and to what new values?) (2 marks)