(10 points) a. (2 points) Consider a bank that has $1M in equity, and $10M in assets. Draw the bank's balance sheet and calculate its leverage. b. (2 points) Suppose that the value of assets drops by 5%. Calculate the bank's new level of leverage. How many assets does the bank need to sell to restore its previous level of leverage? c. (2 points) Consider another bank that has $2M in equity, and $10M in assets. Draw the bank's balance sheet and calculate its leverage. d. (2 points) Suppose that the value of assets drops by 5\%. Calculate the bank's new level of leverage. How many assets does the bank need to sell in this case to restore its previous level of leverage? e. ( 2 points) From the analysis above, provide a reason why regulators may require banks to hold higher levels of equity. Relate your analysis to the notion of contagion. (10 points) a. (2 points) Consider a bank that has $1M in equity, and $10M in assets. Draw the bank's balance sheet and calculate its leverage. b. (2 points) Suppose that the value of assets drops by 5%. Calculate the bank's new level of leverage. How many assets does the bank need to sell to restore its previous level of leverage? c. (2 points) Consider another bank that has $2M in equity, and $10M in assets. Draw the bank's balance sheet and calculate its leverage. d. (2 points) Suppose that the value of assets drops by 5\%. Calculate the bank's new level of leverage. How many assets does the bank need to sell in this case to restore its previous level of leverage? e. ( 2 points) From the analysis above, provide a reason why regulators may require banks to hold higher levels of equity. Relate your analysis to the notion of contagion