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Given the Trust Bank (a commercial bank) balance sheet contains the following items; Stock shares, $300,000; Reserves, $60,000; Property, $290,000; Checkable deposits, $150,000; Securities,
Given the Trust Bank (a commercial bank) balance sheet contains the following items; Stock shares, $300,000; Reserves, $60,000; Property, $290,000; Checkable deposits, $150,000; Securities, $40,000; Loans, $60,000 and Reserve Requirement Ratio = 20%. Answer the following five (5) questions. 1. Larry a depositor at the Trust bank, is applying for a loan worth $10,000 and his application is approved. Show the adjustment that takes place in the Trust Bank's balance sheet. 2. Larry is making a full loan repayment. Show the adjustment that takes place in the Trust Bank's balance sheet. 3. The central bank sells government securities to the current commercial bank worth $100,000. Show the adjustments that take place in the Trust Bank's balance sheet. 4. The central bank buys government securities from the current commercial bank worth $100,000. Show the adjustments; and the latest status of the commercial bank's balance sheet after this transaction takes place. 5. Suppose this bank's initial reserve is $1000. Assuming the money deposited is borrowed over and over again, without any leakage throughout the process, calculate; i. Maximum amount of money expansion ii. Maximum amount of new money creation
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ANSWER i From the given data as followed by Now we have to consider taht the data as followed by Here Given the balance sheet of Banking Company named TRUST BANK Where It contains Following Liabilitie...Get Instant Access to Expert-Tailored Solutions
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