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What is the maximum amount of write-downs (defaults) the bank could sustain without becoming insolvent (bankrupt)? Values are millions of dollars. Assets Liabilities Reserves $60 Transaction Deposits $500 Bonds $400 CDs $300 Loans $600 Equity _____

Respuesta :

Answer:

The Equity for the bank will be $260

Explanation:

Assets of the banks are

Reserve = $60

Bond = $400

Loans = $600

Total Asset = $1,060

Liabilities of the banks are

Deposit = $500

CD's: = $300

Total Liabilities = $800

Equity = Asset - Liabilities

Equity = $1,060 - 800

Equity = 260

The maximum amount of the bank to sustain without becoming insolvent their Equity is $260

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