Work

Exercise 1 1) A new bank is incorporated with initial capital of 100m. 2) The bank is required by regulations to keep 10% of assets in reserves at all times. 3) The bank makes loans for what is left. 4) The bank collects 100m in checkable deposits. 5) The bank issues another 100m in equity. 6) The bank sets aside the necessary reserves and loans out the remaining funds. 7) The bank collects interest equal to 5% of the face value of all loans. 8) The bank pays 5% in interest to bondholders and 1% to depositors. 9) The bank distributes a dividend of 4m