Based on the information provided below about banks A and B, compute for each bank its return

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Based on the information provided below about banks A and B, compute for each bank its return on assets (ROA), return on equity (ROE) and leverage ratio.

a. Bank A has net profit after taxes of $1.8 million and the balance sheet below:

Bank A (în millions) Liabilities Assets $5 Deposits $70 Borrowing $45 Bank Capital Reserves Loans $100 $10 Securities $

b. Bank B has net profit after taxesof $0.9 million and the balance sheet below:

Bank B (în millions) Assets Liabilities $7.5 Deposits $55.0 Borrowing $23.5 Bank Capital $75.0 Reserves Loans $3.0 Secu

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...

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Money Banking and Financial Markets

ISBN: 978-1259746741

5th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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Question Posted: Jun 09, 2018 01:12 AM

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Based on the information provided below about banks A and B, compute for each bank its return

Question:

Bank A (în millions) Liabilities Assets $5 Deposits $70 Borrowing $45 Bank Capital Reserves Loans $100 $10 Securities $10 Bank B (în millions) Assets Liabilities $7.5 Deposits $55.0 Borrowing $23.5 Bank Capital $75.0 Reserves Loans $3.0 Securities $8.0

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For both banks we will compute ROA as and ROE as As a check we not...View the full answer

Money Banking and Financial Markets

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