identify and explain three in main task involved in project cost management.

Question One Below is the balance sheet of Rosike Bank. Use it to answer the questions that follow. Assume the banks required reserve ratio is 12%. Rosike Banks Balance Sheet Assets Liabilities/Equity Reserves GH150,000 Demand Deposits GH1,500,000 Loans GH850,000 Shareholders Equity GH550,000 Securities GH400,000 Fixed Assets GH650,000 GH2,050,000 GH2,050,000

Is the bank over or under reserved and what is the amount? What is the maximum amount by which the bank can increase money supply by creating deposits through loans? Suppose that a loan, in the amount of the excess reserves found in b), is made to Alfred. What effect does this transaction have on the banks balance sheet? Suppose that Alfred immediately spends all of his loan by writing a cheque to his psychologist, Freda Johnson, who deposits it in her bank account, which happens to also be at the Rosike Bank. What effect do these transactions have on the banks balance sheet? Now, is Rosike Bank over or under reserved? If so, by how much? Suppose the bank experiences an outflow of GHC80,000, what type of problem can this outflow cause to the bank? What is the minimum amount the Bank has to convert into reserves following the deposit outflow. In what four ways can the problem identified in f) above be solved? Show how each affects the balance sheet of Rosike Bank.

Question Two In what ways do sufficient reserves (excess reserves) and capital benefit financial institutions? Enumerate any four benefits each. Examine any four strategies that financial managers use to manage their credit risk.