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kondaur [170]
3 years ago
12

Use the information presented in Midwestern Mutual Bank's balance sheet:

Business
1 answer:
nevsk [136]3 years ago
5 0

Answer and Explanation:

In the given case it is mentioned that when the bank borrow $100 in order to supplement their existing reserves

So it would increase the reserve and debt by $100

The initial value of the leverage ratio is

= total assets ÷ total equity

= (Reserves+ loans+ securities) ÷ (owner's enquity)

= ($175 + $700 + $875) ÷ $125

= $1750 ÷ 125

= 14

Now the new value of the leverage ratio is  

= total assets ÷ total equity

= (Reserves+ loans+ securities) ÷ (owner's enquity)

= ($175 + $700 + $875 +  $100) ÷ $125  

= $1850 ÷ $125

= 14.8

The statement that should be true for the capital requirement is option A as it derives that the greater the percentage of the asset the bank would hold the more the capital requirement

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Gray is a 50% partner in Fabco Partnership. Gray's tax basis in Fabco on January 1, year 4, was $5,000. Fabco made no distributi
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Answer:

$21000

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