A banks assets consist of: Cash: ...... $1.5 million Loans: ..... $10 million Securities .... $4.5 million
Question:
Cash: ...... $1.5 million
Loans: ..... $10 million
Securities .... $4.5 million
Fixed assets ... $2 million
In addition, the bank’s owners’ capital is $1.5 million.
a. Calculate the equity capital ratio.
b. If $2 million in bad loans were removed from the bank’s assets, show how the equity capital ratio would change.
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Related Book For
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar
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