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    Harvard university
    Feb-1997 - Aug-2003

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    Strayer University
    Jan-2007 - Present

Category > Economics Posted 12 Jul 2017 My Price 7.00

Question 1

Question 1
First National Bank has reserves of $80, loans of $520, and checkable deposits of $600. If the bank faces
a required reserve ratio of 5%, what are the bank's excess reserves?
$20
$34
$70
$50 Question 2
Suppose that initially, Center Bank has checkable deposits of $400, loans at $290 and reserves at 110.
Then Center Bank receives a new deposit of $200. The required reserve ratio is 6%. After the new
deposit but prior to asset transformation, the bank has excess reserves of ____, and then after asset
transformation the bank's total value of loans is now ____ .
$202; $450
$220; $466
$274; $564
$520; $630 Question 3
Suppose that Bank One has deposits of $1200, bank capital of $100, reserves at $120 and loans at
$1180. What is the maximum write down in the value of the bank's loans that will keep bank capital
from falling below $25?
$0
$25
$50
$75 Question 4
An entrepreneur needs a $500 loan to invest in a risky project. The entrepreneur will repay the loan
with probability 0.92, and default otherwise. If the bank offers a competitive interest rate on this loan,
what is the required loan repayment? $528
$533.9
$543.5
$566.6 Question 5
A borrower requests a $150 loan from the bank. The borrower is type A with probability 0.35 and type B
otherwise. Type A always repays but type B only repays with probability 0.7. If the bank cannot observe
the borrower's type, what is the competitive interest rate the bank can offer? 24.3%
27.5%
31%
33.3%

 

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Answers

SuperTutor
(15)
Status NEW Posted 12 Jul 2017 03:07 AM My Price 7.00

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file 1499830634-Solutions file.docx preview (51 words )
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