Question 1. The balance sheet of Tribank starts with an allowance for loan losses of $1.33 million. During the year, TriBank charges off worthless loans of $0.84 million, recovers $0.22 million on loans previously charged off, and charges current income for $1.48 million provision for loan losses. Calculate the end-of-year allowances for loan losses.
Question 2. For the up coming week, Nobel National Bank plans to issue $25 million in mortgages and purchase $100 million 31-day T-bills. New deposits of $35 million are expected, and other sources will generate $15 million in cash. What is Nobel's estimate of funds needed?
Question 3. A bank estimates that demand deposits are, on average, $100 million with a standard deviation of $5 million. Than bank wants to maintain a minimum of 8% of deposits in reserves at all times. What is the highest expected level of deposits during the month? What reserves do they need to maintain? Use a 99% confidence level.