The following balance sheet is for 7th State Bank of Oakton. (All values in mill

Question

The following balance sheet is for 7th State Bank of Oakton. (All values in millions) Suppose a customer deposits S7 million at 7* bank. Show how the balance sheet will be altered. Using the original balance sheet, suppose that the bank earns $8 million dollars in profits which it retains and uses to make more mortgage loans. Show the new- balance sheet. Using the original balance sheet, suppose that, worried about government budget deficits, 7th bank decides to get out of Treasury bonds. They sell off their portfolio of bonds at a loss of $2 million. Show the new balance sheet. Using the original balance sheet suppose that bank regulators instruct the bank to increase its equity capital by $0.5 million. How can it do this? Show the new balance sheet.

Explanation / Answer

Hi,
Please refer to the following excel file, if you have any confusion, please comment, and I shall surely help.

If satisfied, please rate this answer.

https://dl.dropbox.com/u/83216089/asol/liabilities--q3797811.xlsx

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