A bank's assets are $670 million and its liabilities are $490 million,which means that the bank's net worth (bank capital)is ____________________.If the bank's assets rise by 6% at the same time that its liabilities rise by 4%,the bank's new net worth will then be _______________.

Question

Quizplus · Accepted Answer

The bank's net worth is calculated as assets minus liabilities, so initially it's $670 million - $490 million = $180 million. After the increase, assets are $670 million * 1.06 = $710.2 million, and liabilities are $490 million * 1.04 = $509.6 million. The new net worth is $710.2 million - $509.6 million = $200.6 million, but since this option isn't available, the closest correct initial calculation is in option B, indicating a possible mistake in the second part of the options provided.

A Bank's Assets Are $670 Million and Its Liabilities Are