Hello. Please complete question number 3. You DO NOT have to worry about the ROA, ROE or the ratios. Simplyconstruct both the bank?s balance sheet statement for the end of the year, 2013 and its income-expenditure statement for the year.The numbers and details all given. These statements must be constructed in the format for a financial institution (bank). Not a firm (company).

CONCORDIA UNIVERSITY ECONOMICS 331/2: TAKE HOME ASSIGNMENT (20%) Professor: Dr. D. Otchere Fall 2015 Due: October 22, 2015 INSTRUCTIONS: Do all questions. Answers submitted exclusively in pencil will not be marked except for diagrams and calculations, where necessary. -------------------------------------------------------(i). Assume that the household of Rosemarie and Dan has the following set of assets and liabilities at the end of the year, 2013: Mortgage loan ($125,000); Credit card debt ($2,000); Car loan ($6,000); House ($150,000); Stocks and bonds ($15,000); Cash and checking accounts ($1,500); Furniture & Furnishings ($4,500); Books, paintings, & Jewellery ($7,000); Savings deposit ($11,000); Car ($15,000). (i) CONSTRUCT their balance sheet statement for the end of 2013; (ii) determine their net worth at the end of the year; and (iii) indicate how they can RAISE their net worth for the following year. (40 marks) (ii). Now suppose that YOU have an initial endowment equivalent to the amount of NET WORTH you have just calculated for the above household in Q.(i) above. Assuming that the current market interest rate is 5% and is expected to remain at this level for a long time, what will be the expected value of your initial endowment at the end of one year? What is the value for ten (10) years? What is the value for twenty-five (25) years? Why are the expected values different for the different periods even though the interest rate remains the same? (10 marks) (iii). Given the following information on the revenues, expenses, assets and liabilities of a hypothetical Canadian bank for the year 2013, determine the bank's return on assets (ROA), its return on equity (ROE), its liquidity ratio; and capital adequacy ratio. Lastly, construct both the bank's balance sheet statement for the end of the year, 2013 and its income-expenditure statement for the year. Salaries and employee benefits.....$180,000; Interest on deposits.....$270,000; Interest on loans.....$320,000; Income from Government of Canada bonds.....$75,000; Interest on non-deposit borrowing.....$30,000; Applicable income taxes.....$150,000; Occupancy costs.....$21,000; Provision for loan losses.....$22,000; Miscellaneous expenses..... $8,000; Interest on municipal securities.....$86,000; Service charges on deposits..... $210,000; Miscellaneous operating revenues.....$130,000; Equity capital.....$70 million; Demand deposits.....$100 million; Savings deposits.....$150 million; Time deposits..... $300 million; Advances from the central bank.....$12 million; Cash reserves.....$20 million; Other assets.....$150 million; Real estate loans.....$80 million. Government of Canada securities.....$25 million; Commercial and industrial loans.....$300 million; other liabilities.....$38 million; Municipal securities.....$55 million; Loans to individuals.....$40 million. (50 marks)