A bank is insolvent when Question 24 options: a) its liabilities exceed its assets. b) its capital exceeds its liabilities. c) its assets exceed its liabilities. d) its assets increase in value.
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24.
A bank is insolvent when
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- What is the asset-liability time mismatch that all banks face?39. Consider a fractional-reserve banking system in which an initial deposit of $1,000 can generate up to $4,000 in money. What is the reserve ratio? (A) 4 percent. (B) 5 percent. (C) 25 percent. (D) 75 percent.11. Currently, deposits are insured by the FDIC up to ___________ per depositor per bank. Question 11 options: a) $1,000,000. b) $250,000. c) $10,000. d) $100,000.
- 2-A bank has deposits of $ 6 000 000 , its total actual reserves are $1 200 000 and the legal reserve ratio is 0.12 . (a) What is the amount of reserves ? (b) What is the amount of excess reserves ? (c) If the reserve ratio changes to 0.10 what would be the effect on reserves and total actual reserves ,amount of excess reserves remaining the same ?11. Macroland has a very simple banking system, in which there is only one chartered bank (The First Bank). The government of Macroland imposes a minimum required reserve ratio of 3%. Individuals in Macroland hold a fixed amount of $1200 in the form cash to facilitate their daily transactions and will deposit any excess amount of money into their bank accounts. The initial balance sheet of the First Bank is as follows: Assets Liabilities & Equity Reserves $255 Chequable deposits $7500 Loans $7400 Shareholder equity $155 Note: Unless otherwise stated, the First Bank will hold the excess reserves fixed at the current level as shown in the initial balance sheet and will lend out any surplus of reserves beyond this. a. Find the required reserves and the excess reserves held by the First Bank. b. Suppose there is a change in money demand such that people increase their cash holdings by $45 by withdrawing cash from their bank accounts. By how much will the money supply change? c. Return to…30. Which of the following statements is true? Question 30 options: a) A bank’s balance sheet shows that total assets equal total liabilities plus equity capital. b) A bank’s balance sheet indicates whether or not the bank is profitable. c) A bank’s liabilities are its uses of funds. d) A bank’s assets are its sources of funds.
- QUESTION 16 Bank of Rigel holds $654 million of assets and $579 million of liabilities. Then, the not worth (capital or owners equity) of Bank Rigel is $ million. (Answer in whole number without $ sign or comma (,) or decimal e.g. 1234) 410. . First national bank has liabilities of $1.5 million and owner’s equity of $550,000. First National Bank’s assets are: $100,000. $700,000. $950,000. $2,050,000.15. If a bank’s return on assets (ROA) is 1%, and its asset-to-equity ratio (equity multiplier) is 10, then the bank’s return on equity (ROE) is Question 15 options: a) 100%. b) 5%. c) 1%. d) 10%.