Chapter 9: Q. 21 (page 264)

New Bank started its first day of operations with $$155$ million in capital. A total of $$ 92$ million in checkable deposits is received. The bank makes a $$28$ million commercial loan and lends another $$ 23$ million in mortgage loans. If required reserves are $5.4 %$ , what does the bank balance sheet look like?

Short Answer

Expert verified

The balance sheet result are

Total asset - $$ 247 m i l l i o n$

Total Liability - $$ 247 m i l l i o n$

Step by step solution

concept Introduction

A bank is a monetary organization authorized to accept deposits and make loans. Banks may also deliver financial benefits such as capital management, money dealings, and secure deposit boxes.

Explanation

The New Bank balance sheet is as follows:

Assets	Liabilities
Required reserves $$ 5 m i l l i o n$	Checkable Deposits $$ 92 m i l l i o n$
Excess reserves $$ 191 m i l l i o n$	Bank Capital $$ 155 m i l l i o n$
Loans $$ 51 m i l l i o n$

$92 millionStep 3 Final answer

Required Reserves - $$ 5 m i l l i o n$

Excess Reserves - $$ 191 m i l l i o n$

Loans - $$ 51 m i l l i o n$

Checkable Deposits - $$ 92 m i l l i o n$

Bank Capital - $$ 155 m i l l i o n$

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

Short Answer

Step by step solution

concept Introduction

Explanation

$92 millionStep 3 Final answer

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Economics Textbooks

Taxation Economics

Study anywhere. Anytime. Across all devices.

Company

Product

Help