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Chapter 9: Q. 21 (page 264)

New Bank started its first day of operations with \(155million in capital. A total of \)92million in checkable deposits is received. The bank makes a \(28 million commercial loan and lends another \)23 million in mortgage loans. If required reserves are 5.4%, what does the bank balance sheet look like?

Short Answer

Expert verified

The balance sheet result are

Total asset -$247million

Total Liability -$247million

Step by step solution

01

concept Introduction

A bank is a monetary organization authorized to accept deposits and make loans. Banks may also deliver financial benefits such as capital management, money dealings, and secure deposit boxes.

02

Explanation

The New Bank balance sheet is as follows:

Assets Liabilities
Required reserves $5millionCheckable Deposits $92million
Excess reserves $191millionBank Capital $155million
Loans $51million
03

$92 millionStep 3 Final answer

Required Reserves - $5million

Excess Reserves - $191million

Loans - $51million

Checkable Deposits - $92million

Bank Capital -$155million

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Most popular questions from this chapter

If the president of a bank told you that the bank was so well run that it has never had to call in loans, sell securities, or borrow as a result of a deposit outflow, would you be willing to buy stock in that bank? Why or why not?

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It is relatively easy to find up-to-date information on banks because of their extensive reporting requirements. Go to http://www2.fdic.gov/qbp/, where you will find summary data on financial institutions. This site is sponsored by the Federal Deposit Insurance Corporation. Click on 鈥淨uarterly Banking Profile,鈥� select the most recent quarter and access QBP, click on 鈥淐omplete QBP鈥� and scroll to Table I-A.

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