A bank balance sheet consists of only the following items: $$\begin{array} { l l }
\text { Deposits } & \$ 1,000 \
\text { Reserves } & \$ 100 \
\text { Securities } & \$ 400 \
\text { Debt } & \$ 500 \
\text { Loans } & \$ 2,000
\end{array}$$ What is the value of bank capital?
A) -$1,000
B) +$500
C) +$1,000
D) +$1,500

Question

A bank balance sheet consists of only the following items: $$\begin{array} { l l } 
\text { Deposits } & \$ 1,000 \
\text { Reserves } & \$ 100 \
\text { Securities } & \$ 400 \
\text { Debt } & \$ 500 \
\text { Loans } & \$ 2,000
\end{array}$$ What is the value of bank capital?
A) -$1,000
B) +$500
C) +$1,000
D) +$1,500

Quizplus · Accepted Answer

Bank capital is calculated as the difference between assets (in this case, reserves, securities, loans) and liabilities (deposits, debt). Therefore, bank capital can be calculated as:

Capital = Reserves + Securities + Loans - Deposits - Debt
Capital = $100 + $400 + $2,000 - $1,000 - $500
Capital = $1,000

Therefore, the value of bank capital is $1,000, making the correct answer choice C.

A Bank Balance Sheet Consists of Only the Following Items