Question

Suppose New Bank decides to invest $\backslash (273$million in $30$-day T-bills. The T-bills are currently trading at $\backslash )4,981$ (including commissions) for a $\$4,940$ face value instrument. How many T-bills do they purchase? What does the balance sheet look like?

Short answer

New bank purchase $54,808$T-bills.

Step-by-step solution

Step 1; 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 bank can purchase $\$273\mathrm{M}/\$4,981$, which is about $54,808$T-bills. The New Bank balance sheet is as follows:

Assets	Liabilities
Required Reserves $\$18million$	Checkable Deposits $\$277million$
Excess Reserves $\$97million$	Bank Capital $\$159million$
T-bills $\$273million$
Loans $\$48million$

Final answer

Required Reserves -$\$18million$

Excess Reserves -$\$97million$

T- bills - $\$273million$

Loans -$\$48million$

Checkable Deposits -$\$277million$

Bank capital -$\$159$