Homework Assignment 3 Econ 510 ZA-Fall 2018 Name: Due: Tuesday, September 18 Thi
ID: 1137206 • Letter: H
Question
Homework Assignment 3 Econ 510 ZA-Fall 2018 Name: Due: Tuesday, September 18 This assignment covers CH 4 and CH 5, of the textbook, and it has 3 sections: Multiple-Choice, Short Essays and Problem solving. Please write your concise and clear answers for each question and use your best handwriting to answer the essays and problems. Your poor handwriting will result in loosing credit 1. A bank balance sheet consists of only the following items: Deposits $1,000 Reserves $100 Securities $400 Debt Loans S500 $2,000 What is the value of bank capital? A) -$1,000 B) +S500 C) +$1,000 D) +1,500 Use the following to answer questions 2-3: Bank Balance Sheet ssets Liabilities & Net Worth S 10,00 100,00 40,00 $100,00 20,00 30,00 sats Debt ties 2. (Table: Bank Balance Sheet) Based on the table, what is the leverage ratio at the bank? A) 3 B) 4.67 D) 10 3. (Table: Bank Balance Sheet) Based on the table, what is the reserve-deposit ratio at the bank? A) 3 percent B) 5 percent C) 10 percent D) 15 percent Page 1Explanation / Answer
1) Bank capital = Assests - liabilities = (Reserves + loans + securities) - (Deposits + Debt) = $(100 + 2000 + 400) - $(1000 + 500) = $1000 OPTION C
2) Leverage ratio = Assets/Capital = (10,000 + 100,000 + 40,000)/(150,000 - 120,000 ) = 150,000/30,000 = 5 OPTION C
3) Reserve-Deposit ratio = Reserves/Deposits = 10,000/100,000 = 0.1 or 10 percent OPTION C
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.