The bank you own has the following balance sheet: Assets Reserves Loans $ 75 million $525...

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The bank you own has the following balance sheet: Assets Reserves Loans $ 75 million $525 million Liabilities Deposits Bank Capital $500 million $100 million If the bank suffers a deposit outflow of $50 million with a desired reserve ratio on deposits of 10%, what actions should you take? If a bank finds that its ROE is too low because it has too much bank capital, what can it do to raise its ROE? If a bank is falling short of meeting its capital requirements by $1 million, what three things can it do to rectify the situation? • Why do equity holders care more about ROE than about ROA? • What are the benefits and costs for a bank when it decides to increase the amount of its bank capital? The bank you own has the following balance sheet: Assets Reserves Loans $ 75 million $525 million Liabilities Deposits Bank Capital $500 million $100 million If the bank suffers a deposit outflow of $50 million with a desired reserve ratio on deposits of 10%, what actions should you take? If a bank finds that its ROE is too low because it has too much bank capital, what can it do to raise its ROE? If a bank is falling short of meeting its capital requirements by $1 million, what three things can it do to rectify the situation? • Why do equity holders care more about ROE than about ROA? • What are the benefits and costs for a bank when it decides to increase the amount of its bank capital?

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1 If the bank suffers a deposit outflow of 50 million with a desired reserve ratio on deposits of 10 the bank needs to adjust its reserves to maintain the desired reserve ratio Here are the actions th... View the full answer