The following tables show the balance sheets of two banks: East Bank and West Bank.

East Bank Balance Sheet
Assets	Liabilities and Net Worth
Reserves	$100,000	Checking deposits	$300,000
Loans outstanding	$250,000	Stockholders' equity	$50,000
Total	$350,000	Total	$350,000

West Bank Balance Sheet
Assets	Liabilities and Net Worth
Reserves	$0	Checking deposits	$0
Loans outstanding	$500,000	Stockholders' equity	$500,000
Total	$500,000	Total	$500,000

_________________-is a levered bank, while ________________ is an unlevered bank.

Assume that both banks offer an annual rate of 2% on checking deposits and charge an annual rate of 4% on loans.

For West Bank, the annual interest cost on deposits is $________________

, and the annual return on loans is$ ___________

. Hence, West Bank earns a net profit of $______________

, which represents a rate of return of %_______________________

(Hint: Round to 1 decimal place.) on stockholders' equity.

For East Bank, the annual interest cost on deposits is $___________

, and the annual return on loans is $_______________

. Hence, East Bank earns a net profit of $__________________

, which represents a rate of return of %________

(Hint: Round to 1 decimal place.) on stockholders' equity.

Suppose that the value of loans in both banks declines by 10%. The amount of loans outstanding for East Bank decreases from $250,000 to $_______________

, which represents a loss of _______________%

(Hint: Round to 1 decimal place.) of stockholders' equity. The amount of loans outstanding for West Bank decreases from $500,000 to $______________

, which represents a loss of _____________%

(Hint: Round to 1 decimal place.) of stockholders' equity.

Therefore, ____________(WEST BANK / EAST BANK ) provides a higher rate of return to its investors, a_________________(WEST BANK /EAST BANK) exposes its investors to greater risk in the event of a decline in the value of loans.