The following table shows the initial balance sheet of a hypothetical bank. There are no reserves requirements (the required reserve ratio is zero). However, reserves cannot go below zero. The Fed wouldn't like that. The borrowings are either from the Fed or from other banks. Assets Liabilities & NW Reserves $20.00 Deposits $140.00 Securities $20.00 Borrowings $30.00 Loans $160.00 Bank Capital $30.00 Total $200.00 Total $200.00 Start from the initial balance sheet above. Suppose that the firm makes an after tax profit of $6. This results in the following rates of returns for this bank: percent Rate of Return on Assets= percent Rate of Return on Equity %3D
The following table shows the initial balance sheet of a hypothetical bank. There are no reserves requirements (the required reserve ratio is zero). However, reserves cannot go below zero. The Fed wouldn't like that. The borrowings are either from the Fed or from other banks. Assets Liabilities & NW Reserves $20.00 Deposits $140.00 Securities $20.00 Borrowings $30.00 Loans $160.00 Bank Capital $30.00 Total $200.00 Total $200.00 Start from the initial balance sheet above. Suppose that the firm makes an after tax profit of $6. This results in the following rates of returns for this bank: percent Rate of Return on Assets= percent Rate of Return on Equity %3D
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 8E
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please give me calculation!
Transcribed Image Text:The following table shows the initial balance sheet of a hypothetical bank.
There are no reserves requirements (the required reserve ratio is zero).
However, reserves cannot go below zero. The Fed wouldn't like that. The
borrowings are either from the Fed or from other banks.
Assets
Liabilities & NW
Reserves
$20.00 Deposits
$140.00
Securities
$20.00 Borrowings
$30.00
Loans
$160.00 Bank Capital
$30.00
Total
$200.00 Total
$200.00
Start from the initial balance sheet above. Suppose that the firm makes an
after tax profit of $6. This results in the following rates of returns for this
bank:
percent
Rate of Return on Assets=
percent
Rate of Return on Equity:
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