Chapter 16 probs and apps

A3

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1. Inventory in detail all the vehicles you use for managing your cash flows, Include all your accounts that are mediated through banks and finance companies. Also, list your cards issued by banks, such as debit or ATM cards, and identify any direct deposits and automatic payments that are made through your savings and checking accounts. How might you further enhance your cash management through the use of banking tools?

Reserves $ 100 Checkable Deposits 1,000 300 Loans (to customers) Property Securities (owned) Stock Shares 400 300 100 Refer to the accompanying table of information for the Moolah Bank. Assume that the listed amounts constitute this bank's complete set of accounts. Moolah's assets are $1,100. liabilities are $1,100. net worth is $300. profit is $1,000.

First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Liabilities and Net Worth Assets US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000 The required reserve ratio is 25% for all banks. Second National Bank is capable of loaning $ (Do NOT enter the '$' in your response. Enter a whole dollar amount; do NOT enter cents.) to its customers. Blank 1

First National Bank Liabilities and Net Worth Assets US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000 The Required Reserve Ratio is 25% for all banks. Rob, who banks at Third National, writes a check in the amount of $100,000 to Darrin, a First National customer, who deposits the check in-full into his checking account. List which balance sheet entries at each bank change and what their new values are.

3-4 please

First National Bank Assets Liabilities and Net Worth    US Treasury Bonds $450,000    Net Worth $500,000    Reserves (Cash) $175,000    Checkable Deposits $250,000    Loans $125,000              Second National Bank Assets Liabilities and Net Worth    US Treasury Bonds $100,000    Net Worth $250,000    Reserves (Cash) $250,000    Checkable Deposits $100,000        Third National Bank Assets Liabilities and Net Worth    US Treasury Bonds $900,000    Net Worth $1,000,000    Reserves (Cash) $350,000    Checkable Deposits $500,000    Loans $250,000           The required reserve ratio is 25% for all banks. Second National Bank is capable of loaning $____________ (Do NOT enter the '$' in your response. Enter a whole dollar amount; do NOT enter cents.) to its customers.

First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000The Required Reserve Ratio is 25% for all banks. Assuming that all the customers that have outstanding loans have used all of those additional funds to invest in new machinery for their businesses (therefore, the amount of Checkable Deposits is the true liability the bank has to its customers), then $_____________ is the resulting change to the loan creating potential of the whole system (these three banks) as a result of Second National Bank customers depositing an additional $400,000 in their Checkable…

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Use the information given in Upper Midwest National Bank's balance sheet to answer the following questions. Assets Reserves Loans Securities Bank's Balance Sheet $150 $600 Liabilities and Owners' Equity $1,200 Deposits Debt $750 Capital (owners' equity) Suppose a new customer adds $100 to his account at Upper Midwest National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the account. $200 This would also bring the leverage ratio from its initial value of The riskiness of each asset $100 The total value of liabilities Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base to a new value of

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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…

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You are getting married and are unhappy with your present bank. Discuss how you should go about choosing a new bank and opening an account.  Consider the factors that are important to you in selecting a bank – such as the type and ownership of accounts (individual or joint) and bank fees and charges, among others.

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11. Please answer the table.

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7. What economic functions do financial intermediaries perform?

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Use the information given in North Central National Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at North Central National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and account. the This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base The return on each asset The total value of liabilities

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Table 13.2: FIRST CHARTER BANK Assets Reserves $700 $200 $900 Liabilities Deposits Net Worth ? ? Loans ? Total Total 17. Refer to Table 13.2. The required reserve ratio is 20%. If the First Charter Bank is Meeting its reserve requirement and has no excess reserves, its reserve equal: a) $100. b) $150. c) $140. d) $180. 18. Refer to Table 13.2. The required reserve ratio is 20%. If the First Charter Bank is Meeting its reserve requirement and has no excess reserves, its loans equal: a) $710 b) $460 c) $550 d) $760

c14. You have savings accounts at two separately FDIC insured banks, ABC Bank and XYZ bank. At ABC your account has a balance of $200,000. At XYZ bank the account balance is $60,000. a. If both banks fail how much will you receive? b. You find out that ABC and XYZ banks are going to merge. If you are concerned about the possibility of the new bank failing what would you do?