Questions
Homework:Chapter 10 Homework
Multiple fill-in-the-blank
Part 1Oldhat Financial starts its first day of operations with $99 million in capital. A total of $125125 million in checkable deposits are received. The bank makes a $3030 million commercial loan and another $6060 million in mortgages, with the following terms: 200200 standard 3030-year, fixed-rate mortgages with a nominal annual rate of 5.25%, each for $300,000300,000. Assume that required reserves are 88%.Complete the bank's balance sheet provided below. (Round your responses to the nearest whole number.)[table] Assets | Liabilities Required reserves | $enter your response here | million | Checkable deposits | $enter your response here | million Excess reserves | $enter your response here | million | Bank capital | $enter your response here | million Loans | $enter your response here | million | | | [/table]
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Step-by-Step Analysis
The problem asks us to complete a balance sheet for Oldhat Financial given capital, deposits, and loan activity, with a specified reserve requirement and loan totals. To proceed, I will map out the logical steps and then address each field.
First, identify the key totals from the scenario:
- Bank capital: 99 million
- Checkable deposits received: 125 million
- Loans made: 30 million in commercial loans + 60 million in mortgages = 90 million
- Reserve requirement: 8% of checkable deposits = 0.08 × 125 = 10 million
Now, lay out the balance sheet structure (Assets = Liabilities):
- Assets typically include Reserves and Loans (and possibly other assets, but here we only have these).
- Liabilities include Checkable deposits and Bank capital.
Compute total assets and the resulting reserve......Login to view full explanationLog in for full answers
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