Money and Banking problem
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exam2_q25-301.xlsxQuestion 25
| Balance Sheet for First Russellville Bank | |||||
| Assets | Liabilities | ||||
| Vault Cash | $90.00 | Checking Accounts | $700.00 | ||
| Deposits at the Fed | $100.00 | Savings Accounts | $300.00 | ||
| Treasury Bills (3 month) | $600.00 | 5 year CDs | $338.00 | ||
| Mortgages (30 years) | $1,250.00 | NOW Accounts | $600.00 | ||
| Capital | |||||
| Question 25) The regulators at the FDIC decide to change the capital requirement in order to help prevent another bank crisis. They increase their capital requirement by the amount shown on blackboard. What is the current required capital ratio? What is the new capital ratio? What is the new capital requirement in dollars? (4 points) | |||||
| Answer: | |||||
Question 27
| Balance Sheet for First Russellville Bank | ||||||
| Assets | Liabilities | |||||
| Vault Cash | $90.00 | Checking Accounts | $700.00 | |||
| Deposits at the Fed | $100.00 | Savings Accounts | $300.00 | |||
| Treasury Bills (3 month) | $600.00 | 5 year CDs | $338.00 | |||
| Mortgages (30 years) | $1,250.00 | NOW Accounts | $600.00 | |||
| Capital | ||||||
| Question 27) Now suppose that Congress passes a new law increasing the capital ratio even higher than the FDIC had done. The new capital-to-assets ration is shown on blackboard. In the space below show the new balance sheet. (4 points) | ||||||
| Answer: | ||||||
| Balance Sheet for First Russellville Bank | ||||||
| Assets | Liabilities | |||||
| Vault Cash | Checking Accounts | |||||
| Deposits at the Fed | Savings Accounts | |||||
| Treasury Bills (3 month) | 5 year CDs | |||||
| Mortgages (30 years) | NOW Accounts | |||||
| New Loans | Capital | |||||
| $0.00 | $0.00 | ERROR:#DIV/0! | ||||
| New Capital Ratio = | ||||||
| New Investment = | ||||||
| New Capital = |
Question 28
| Balance Sheet for First Russellville Bank | |||||
| Assets | Liabilities | ||||
| Vault Cash | $90.00 | Checking Accounts | $700.00 | ||
| Deposits at the Fed | $100.00 | Savings Accounts | $300.00 | ||
| Treasury Bills (3 month) | $600.00 | 5 year CDs | $338.00 | ||
| Mortgages (30 years) | $1,250.00 | NOW Accounts | $600.00 | ||
| Capital | |||||
| Question 28) Suppose that First Russellville Bank is holding excess reserves in the amount shown on blackboard. What is the required reserve ratio? (3 points) | |||||
| Answer: | Excess reserves = | ||||
| Required Reserves = | |||||
| Required Reserve Ratio= | |||||
Question 29
| Balance Sheet for First Russellville Bank | |||||
| Assets | Liabilities | ||||
| Vault Cash | $90.00 | Checking Accounts | $700.00 | ||
| Deposits at the Fed | $100.00 | Savings Accounts | $300.00 | ||
| Treasury Bills (3 month) | $600.00 | 5 year CDs | $338.00 | ||
| Mortgages (30 years) | $1,250.00 | NOW Accounts | $600.00 | ||
| Capital | |||||
| Question 29) How much will this bank’s profits change if interest rates decrease by the amount shown in blackboard? (6 points) | |||||
| Answer: | interest rate change: | ||||
