Question: 6. This exercise utilizes two ance sheets, one for the Federal Reserve and one for BHZ Bank, a representative member of sheets the banking system.
6. This exercise utilizes two ance sheets, one for the Federal Reserve and one for BHZ Bank, a representative member of sheets the banking system. Given the following balance sheet showing the Fed's initial position, suppose the Federal Reserve wants to raise bank reserves by $100 million by transacting with BHZ Bank. THE FEDERAL RESERVE (All values in millions of dollars) Assets Liabilities and Shareholders' Equity Treasury Bonds Other bonds 1,300 400 1,100 Reserves 600 Currency 1,700 Total Assets 1,700 Total Liabilities After the transaction is completed, show how the Fed's balance sheet will look. (You must enter six integer values, one for each balance sheet item.) THE FEDERAL RESERVE (All values in millions of dollars) Assets Liabilities and Shareholders' Equity Treasury Bonds Other bonds Currency Total Assets Total Liabilities Now suppose the following balance sheet shows BHZ Bank's position prior to its transaction with the Fed. BHZ BANK (All values in millions of dollars) Assets Liabilities and Shareholders' Equity Deposits and other liabilities Shareholders' equity 900 200 Reserves 300 800 Bonds and other investments Total Assets 1,100 Liabilities + Shareholders' equity 1,100 After its transaction with the Fed is completed, show how BHZ Bank's balance sheet will look. (You must enter six intege values, one for each balance sheet item.) BHZ BANK (All values in millions of dollars) Assets Liabilities and Shareholders' Equity Reserves Bonds and other investments Total Assets Deposits and other liabilities Shareholders' equity Liabilities+Shareholders' equity
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