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White raven [17]
3 years ago
13

Use the information presented in Midwestern Mutual Bank's balance sheet to answer the following questions.

Business
1 answer:
ratelena [41]3 years ago
3 0

Answer:

Answer for task 1: Increase

Answer for task 2: debt

Answer for task 3: -13.33

Answer for task 4: -14.00

Answer for task 5: reserve requirement

Explanation:

<u>Task 1:</u>

In the given question, the owner has borrowed $100 supplement to their existing reserves. Since the owner has borrowed, the value of debt would <u>increase</u>.

<u>Task 2:</u>

<u>Leverage ratio before borrowing:</u>

Leverage ratio = \frac{Total assets}{Capital}

Leverage ratio = \frac{200 + 800+1000}{-150}

Leverage ratio = -13.33

The leverage ratio before borrowing is - 13.33

<u>Task 3:</u>

<u>Leverage ratio after borrowing:</u>

Leverage ratio = \frac{Total assets}{Capital}

Leverage ratio = \frac{2000 + 100}{-150}

Leverage ratio = -14.00

The leverage ratio after borrowing is - 14.00

<u>Task 4:</u>

This would also bring the leverage ratio from its initial value of -13.33 to a new value of -14.00.

<u>Task 5:</u>

<u>Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply.</u>

The option is<u> "b"</u>

When determining how to allocate their assets bankers take into account the reserve requirement.

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