Question
This is the assignment: First, make up and state an average home price for the houses that your imaginary bank has loans on.Then, make a
This is the assignment:
First, make up and state an average home price for the houses that your imaginary bank has loans on.Then, make a healthy bank balance sheet, making sure to specify a number for each item of assets and liabilities (it will be easiest if you copy the exhibit, but you can make up your own).Next, bad news.It comes to light that the government spent decades encouraging people who couldn't afford homes to buy them in order pursue a goal of making everyone's housing the same. Unfortunately, your community has many such homes.Now, state the average home price if the price of homes is cut in half due to this massive housing crisis.Next, make a new bank balance sheet with every number the same except for the Loans category.That is worth a smaller amount now.Assuming all the banks loans were single family homes impacted by the housing crisis, insert your new number for the value of the loans in a second version of the Balance Sheet.Finally, give an opinion on the financial health of this bank after the government pursued a poor policy choice.
My question:
I'm on the last part of the question now. Where it says, "Insert your new number value of the loans in a second version of the balance sheet." Would it just be half of what it was, due to the average house price being cut in half? Is there an equation I'm missing??
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started