Balance sheet for National Bank as of yesterday is provided below. Required reserve ratio is 12%.

1. Calculate the banks excess reserve?
2. Suppose a depositor wanted to transfer $200,000 out of their checking account to another bank. Could Maritime honor that request? How would Maritime need to change their balance sheet to be appropriately managing their liquidity?
3. From the original balance sheet, suppose the bank expects interest rates to rise which would impact the value of their government bonds. Suppose the price of the 10 year Treasury bonds is expected to change by 6%. Would this cause a problem for the bank? Why or why not?

Asset			Liabilities
Vault Cash	300,000		Checkable Deposits	3,400,000
Reserves at the Fed	400,000		Saving Deposits	4,500,000
30 day Treasury Bills	2,600,000		Long-term Time Deposits	1,400,000
10 year Treasury Bonds	1,940,000		Discount Loans	0
Mortgages	3,960,000		Federal Funds Loans	0
Federal Funds Loans	800,000		Bank Capital

Answer rating: 100% (QA)

To calculate the banks excess reserve we need to first find the required reserve amount which is 12 ... View the full answer