A bank has $100 in assets and a net worth of $100. Suppose that the bank...

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A bank has $100 in assets and a net worth of $100. Suppose that the bank doesn't have to hold any reserves and that assets earn 3%. a. How much is this bank earning on its bank capital? (Enter your answer in the following form: For an answer like "eight percent," enter the answer "8" and leave off the percent.) b. By what percentage must the value of the bank's assets decline so that its bank capital was $0? (For an answer of "20%," just enter "20" and leave off the %.) A bank has $100 in assets and a net worth of $100. Suppose that the bank doesn't have to hold any reserves and that assets earn 3%. a. How much is this bank earning on its bank capital? (Enter your answer in the following form: For an answer like "eight percent," enter the answer "8" and leave off the percent.) b. By what percentage must the value of the bank's assets decline so that its bank capital was $0? (For an answer of "20%," just enter "20" and leave off the %.)

Answer rating: 100% (QA)

a To calculate how much the bank is earning on its bank capital we first need to determine the inter... View the full answer