A bank has $252 million in total reserves, of which $12 million are excess reser
ID: 1164791 • Letter: A
Question
A bank has $252 million in total reserves, of which $12 million are excess reserves. The bank currently has $3.617 billion in loans, $1.032 bilion in securities, and $145 million in other assets. The required reserve ratio for transactions deposits is 10 percent. Calculate the sum of this bank's total amount of labilities and net worth.sbillin. (Round your answer to hwo decimal placos) Calculate the additional amount of loans this bank can make to households and fims. S million. Calculate the additional amount of loans this bank can make to households and firrms. Calculate the current quantity of transactions deposits at this bankbillion. (Round your answer to two decimal places.)Explanation / Answer
1) we know that Total assets = Total liabilities and net worth of the bank, i.e., the total sum of assets is equal to total sum of liabilities and net worth.
Total asset = Total reserves + loans + securities + other assets (= 252 + 3617 + 1032 + 145) million = 5046 million = 5.046 billion.
In terms of billion total assets = 5.05 (rounded to two decimal place)
So the sum of this bank's total amount of liabilities and net worth is $5.05 billion.
2) The additional amount of loans this bank can make to household and firms are $12 million, it is so because it is the xcess reserves of this bank.
3) Current quantity of transaction deposit at this bank:
Required reserve ratio is 10%.
The required reserve = total reserves - excess reserves ( 252-12) million = 240 million.
And we know that the required reserve is the required reserve ratio of transaction deposit. It means
$240 million is 10% of transaction deposit
240 = 10/100* transaction deposit
Transaction deposit = $2400million.
The current quantity of transaction deposit at this bank - $2.40 billion.
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