A bank's assets are $400 million and its liabilities are $300 million,which means that the bank's net worth (bank capital)is ____________________.If the bank's assets rise by 8% at the same time that its liabilities rise by 5%,the bank's new net worth will then be _______________.

Question

Quizplus · Accepted Answer

The bank's net worth is calculated as assets minus liabilities, which is $400 million - $300 million = $100 million. If assets increase by 8%, they become $432 million, and if liabilities increase by 5%, they become $315 million. The new net worth is $432 million - $315 million = $117 million.

A Bank's Assets Are $400 Million and Its Liabilities Are