Stealth bank holds deposits of $200 million. It holds reserves of $15 million. It has purchased government bonds worth $75 million. The current value of its loans, if sold at market value, is $130 million. What is the value of the Stealth bank's liabilities? a) $200 million b) $330 million c) $20 million d) $5 million
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- A bank has earning assets of $100 million including $30 million of securities that pay an interest rate of 3%, and $70 million of loans that pay an interest rate of 6% financed by $100 million of deposits paying an interest rate of 3%. What is the bank's Net Interest Margin (NIM)?Lambrook Bank has the following assets and liabilities: Asset A has a maturity of 4 years and a market value of $600,000 and asset B has a maturity of 6 years and a market value of $800,000. Liability X has a maturity of 2 years and a market value of $200,000 and liability Y has a maturity of 5 years and a market value of $300,000. What is the maturity gap of the bank? . .Ubu Bank has the following assets and liabilities : Asset X has a maturity of 3 years and a market value of $600,000 and asset Y has a maturity of 9 years and a market value of $500,000. Liability A has a maturity of 2 years and a market value of $700,000 and liability B has a maturity of 8 years and a market value of $700,000. What is the maturity gap of the bank ? Round your final answer to 2 decimal places. E.g. if the final answer is -3.59 years, type -3.59 in the answer box. If the final answer is 3.59 years, type 3.59 in the box .
- Suppose the Fed conducts an open market purchase by buying $10 million in Treasury bonds from Acme Bank. Sketch out the balance sheet changes that will occur as Acme converts the bond sale proceeds to new loans. The initial Acme bank balance sheet contains the following information: Assets – reserves 30, bonds 50, and loans 50; Liabilities – deposits 300 and equity 30.The reserve requirement is 5% on the first $200 million and 10% in excess of 200 million. The bank has loans of $200 million which is equivalent to the excess reserves. How much is the excess reserves? If the bank sells securities of $10 million and loans this out, prepare an updated balance sheet.East Bank securitises a $50 million pool of its business loans. The asset backed securities (ABS) issued, as a result, come in 3 tranches of bonds: one $10 million tranche with an AAA rating bought by an insurance company fund, a $25 million tranche with a BB rating bought by a superannuation fund and one tranche $15 million with a CCC rating sold to a managed fund. b) Conclude whether East Bank has less credit risk and more funds, as a result of securitization. Explain your answers in details.
- Suppose the Fed conducts an open market purchase by buying $10 million in Treasury bonds from Acme Bank. Sketch out the balance sheet changes that will occur as Acme converts the bond sale proceeds to new loans. The initial Acme bank balance sheet contains the following information: Assets Reserves 30 Bonds 50 Loans 50 Liabilities Deposits 300 Equity Owner’s Equity 30Suppose the Federal Reserve sells a $3000 bond, and the reserve ratio maintained by all private banks is 20%. Assume that all loans are fully redeposited (zero “cash drains”) and that all deposits are checkable deposits. Determine the effect of the bond sale on total loans and deposits in the private banks. Explain in detail how these changes would occur. Illustrate the total result of the effects in part (1) using balance sheets for the consolidated private banks and the Federal Reserve, respectively. Discuss how the effects in part (1) would be different if: (i) the reserve ratio was 25% instead of 20%; (ii) a certain portion of loans were held as cash outside banks instead of being redeposited in the banks.MHM Bank currently has $750 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is increasing this requirement to 10 percent. a. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 60 percent of these funds to MHM Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 70 percent of its excess reserves to loans and borrowers return 80 percent of these funds to MHM Bank as transaction deposits. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers retur percent of these funds to MHM Bank as transaction deposits. (Enter your answers in millions. Do not round intermediate calculations. your "Panel B" answers to 3 decimal places. (e.g., 32.161)) Panel A: Initial Balance Sheets Federal Reserve Bank Assets…
- Consider a bank with the following balance sheet (M means million): Assets Value Duration of the Asset Convexity of the Asset 5yr bond bought at a yield of 3.4% (lending money) $550M 4.562 12.026 $800M 12yr bond bought at a yield of 4% (lending money) 9.453 53.565 Liabilities Value Duration of the Liability Convexity of the Liability 2yr bond sold at a yield of 2.4% $300M 1.941 2.384 (borrowing money) 4yr bond sold at a yield of 2.8% $500M 3.759 8.206 (borrowing money) a) Calculate the equity (total asset – total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) to at –." b) Calculate the duration and convexity of the both asset and liability sides; » et c) If the interest rates go up by 1%, using the duration and convexity rule to determine the net worth of the bank and the equity to asset ratio; the d) In c)'s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero…Consider a bank with the following balance sheet (M means million): Assets Value Duration of the Asset Convexity of the Asset 5yr bond bought at a yield of 3.4% (lending money) $550M 4.562 12.026 12yr bond bought at a yield of 4% $800M 53.565 (lending money) 9.453 Liabilities Value Duration of the Liability Convexity of the Liability $300M 2yr bond sold at a yield of 2.4% (borrowing money) 1.941 2.384 $500M 4yr bond sold at a yield of 2.8% (borrowing money) 3.759 8.206 a) If the interest rates go up by 1%, using the duration and convexity rule to determine the net worth of the bank and the equity to asset ratio; b) In a)'s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise?Suppose the Schoof Company has this book value balance sheet: $30,000,000 Current assets Fixed assets Total assets Short-term debt Long-term debt Common equity Total capital $ 70,000,000 $ $100,000,000 Current liabilities Notes payable The notes payable are to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon nterest rate of 7%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this s the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Long-term debt Common stock (1…