1. The Coppock Bank has $34,000,000 in deposits. If borrowings are $7,000,000, r
ID: 1195781 • Letter: 1
Question
1. The Coppock Bank has $34,000,000 in deposits. If borrowings are $7,000,000, reserves are $3,500,000, and owner's equity is $2,000,000, what are the bank's total liabilities and net worth?
A. $21,500,000
B. $46,500,000
C. $43,500,000
D. $43,000,000
E. $24,000,000
2. A Bank can make loans when:
A. excess reserves are equal to zero
B. excess reserves are greather than zero
C. required reserves are less than excess reserves
D. excess reserves are less than zero
E. required reserves are greater than excess reserves
Explanation / Answer
1. Answer is d .
All other than reserves which the bank have are the liabilities to the bank. They have to returm the deposits, owners equity is also a liability to the bank.
2. A bank can loan out after keeping the required reserve aside. For example if required reserve ratio is 2 percent and 10 rs is deposited , so after deducting 2 rs i.e 8rs can be loan out.
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