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devlian [24]
3 years ago
15

The bank you own has the following balance sheet: Assets Liabilities Reserves $75 million Deposits $500 million Loans $525 milli

on Bank capital $100 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, what actions should you take
Business
1 answer:
aliya0001 [1]3 years ago
5 0

Answer:

Explanation:

Calculation of the amount of required reserve as follows:

Required Reserve = Deposit * required reserve ratio

= $500 million * 10%  

= $50 million  

Therefore, the bank must hold $50 million in required reserve.

It currently has $75 million in reserve so this requirement is met.

If the bank suffers a deposit outflow of $50 million

         Assets                                 Liabilities

Reserves - $25 million      Deposits - $450 million

Loans - $525 million         Bank capital - $100 million

So the required reserve is $450 * 10/100 = $45 million.

But in the reserve account we have only 25 million so we are falling short of $20 million. We need to maintain this required reserve so we can take following actions:  1. By borrowing $20 millions from other bank or financial institutions or corporations.  2. We can sell securities of $20 million.  3. We can borrow some money and can raise some money by issuing securities.

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After you have shaped a successive approximation to a terminal behavior, what general type of reinforcement schedule should you
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Read 2 more answers
Portfolio Returns i. stock has mean of 8% and stdev of 20%; ii bond has mean of 6% and stdev of 15%; iii correlation b/w stock a
ale4655 [162]

Answer:

Portfolio Mean = 7.2%

Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%

Explanation:

The mean return of a portfolio consisting of two securities can be calculated by multiplying the weight of each security in the portfolio by the mean return of that security and adding the products for each security. The formula for two asset or security portfolio return (mean) can be written as follows,

Portfolio Mean = wA * rA  +  wB  *  rB

Where,

  • w represents the weight of each security
  • r represents the mean return of each security

Portfolio Mean = 60% * 8%  +  40% * 6%

Portfolio Mean = 7.2%

The standard deviation is a measure of the total risk. The standard deviation of a portfolio consisting of two securities can be calculated using the attached formula.

Portfolio Stdev = √(0.6)² (0.2)² + (0.4)² (0.15)² + 2(0.6) (0.4) (-0.3) (0.2) (0.15)

Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%

4 0
3 years ago
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