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Consider the Hypothetical Bank Balance Sheet Below to Answer the Following

Question 94

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Consider the hypothetical bank balance sheet below to answer the following questions. Consider the hypothetical bank balance sheet below to answer the following questions.    a.What is the bank's net worth? b.If the reserve requirement is 5 percent,what is the amount of  excess reserves  held by this bank? c.What is this bank's leverage ratio? d.If the bank's investments fall by $1,000,what is the bank's equity? Leverage ratio?
a.What is the bank's net worth?
b.If the reserve requirement is 5 percent,what is the amount of "excess reserves" held by this bank?
c.What is this bank's leverage ratio?
d.If the bank's investments fall by $1,000,what is the bank's equity? Leverage ratio?

Correct Answer:

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a.Net worth = Assets - Liabilities = $11...

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