Question
Use the bank balance sheet at right to answer the following questions. Assume debt and deposits remain unchanged in each scenario. Assets Liabilities and Owners'
Use the bank balance sheet at right to answer the following questions. Assume debt and deposits remain unchanged in each scenario.
| Assets | Liabilities and Owners' Equity | ||
|---|---|---|---|
| Reserves | $300 | Deposits | $1,200 |
| Loans | $1,500 | Debt | $700 |
| Securities | $200 | Capital (Owners' Equity) | $100 |
a. What is the leverage ratio?
b. If the value of the bank's assets rise by 2%, what is the new owners' equity?
Owners' equity = $
c. Assume that total assets and owners' equity are as depicted in the balance sheet. What percentage decline in assets would cause owners' equity to fall to zero?
Percentage decline in assets: %
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Accounting Comes Alive The Color Accounting Parable
Authors: Mark Robilliard ,Peter Frampton, Chang Chang, Mark Morrow, John Gorman
1st Edition
1450769608, 978-1450769600
