WestBank just started operations with $6 million in capital. On the first day of operations, it received
Question:
WestBank just started operations with $6 million in capital. On the first day of operations, it received $100 million in chequable deposits and issued
$25 million non-mortgage loans and another $25 million in mortgages.
A. If the desired reserve ratio is 8%, what does the banks balance sheet look like?
B. On the second day of operations, the bank decides to invest $45 million in 30-day T-bills, traded at $4986.70 per $5000 face value. How many T bills does the bank purchase? How does the banks balance sheet look after the purchase of these T-bills?
C. On the third day of operations, deposits fall by $5 million. What does the balance sheet look like? Are there any problems? If yes, how can the bank address the problems?
Step by Step Answer:
The Economics Of Money Banking And Financial Markets
ISBN: 9780321584717
4th Canadian Edition
Authors: Frederic S. Mishkin, Apostolos Serletis