An FI is planning to issue $ 100 million in commercial loans. It will finance all of

Question:

An FI is planning to issue $ 100 million in commercial loans. It will finance all of it by issuing demand deposits.
a. What is the minimum capital required if there are no reserve requirements?
b. What is the minimum demand deposits it needs to attract in order to fund this loan if you assume there is a 10 percent average reserve requirement on demand deposits, all reserves are held in the form of cash, and $ 8 million of funding is through equity?
c. Show a simple with total assets and total liabilities and equity, assuming this is the only project funded by the bank. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...