1) New bank started its first day of operations with $6 million in capital .A total of $100 million in checkable deposits is received .The bank makes a $25 million commercial loan and another $25 million in mortgage loans. If required reserves are 8%, what does the bank balance sheet looks like.
2) New bank decides to invest $45 million in 30 day T-Bills. The T-Bills are currently trading at $4,986.70(including commissions) for a $5,000 face value instrument .How many do they purchase ? What does the balance sheet look like?
3) Consider a failing bank ,A deposit of 350,000 is worth how much if the FDIC uses the payoff method? The purchase and assumption method? which is more costly to tax payers?
4) If the below bank makes a loan commitment for $10 million to a commercial customer .Calculate the banks' capital ratio before and after the agreement. Calculate the banks risk-weighted assets before and after the agreement.
Assets Liabilities
Required Reserves 8 million Checkable deposits $100 million
Excess Reserves 3 million Bank Capital $6 million
T Bills 45 million
Commercial Loans 50 million