Question

Stealth Bank has deposits of $700 million. It holds reserves of $70 million and has purchased government bonds worth $215 million. The bank's loans have a market value of $490 million. What does Stealth Bank's net worth, or equity capital, equal?

Answer 1

Answer:

$75 million

Step-by-step explanation:

Given that:

Reserve value = $70 million

Purchased government bond = 215 million

Market value of loan = $490 million

Net worth :

Assets - liability

Assets = (Market value of loan + purchased government bond + reserve value)

(490 million + 215 million + 70 million)

275 million + 70 million

= $775 million

Liability = Deposits = $700 million

Net worth = ($775 - $700) million

Net worth = $75 million