Consider the following balance sheet situation of ABC bank: its total assets consist of loans of $50 and bonds of $350; and its total liabilities consist of deposits of $400 and debt of $100. What is the capital of ABC bank?
A) $50.
B) - $100.
C) $0.
D) $100.
E) - $50.

Question

Quizplus · Accepted Answer

The capital of a bank is calculated as total assets minus total liabilities. Here, total assets are $50 (loans) + $350 (bonds) = $400. Total liabilities are $400 (deposits) + $100 (debt) = $500. Therefore, the capital is $400 - $500 = -$100.

Consider the Following Balance Sheet Situation of ABC Bank: Its