Suppose that a bank holds  $15m in treasury bonds  $10m in reserves  $30m of checkable deposits  $20m of time deposits  $6m of capital  How much loan does the bank have if we know it doesn't have any other assets or liabilities  Suppose that checkable deposits and reserves pay 0 interest  The interest rate on treasuries is 3% The loan pays 7% Time deposits pay 5% How much profit does the bank make? What is the bank's return on assets? 3.2% 2.9% 3.7% 2.6%

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter27: Money And Banking
Section: Chapter Questions
Problem 30P: A bank has deposits of 400. It holds reserves of 50. It has purchased government bonds worth 70. It...
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Suppose that a bank holds 

$15m in treasury bonds 

$10m in reserves 

$30m of checkable deposits 

$20m of time deposits 

$6m of capital 

How much loan does the bank have if we know it doesn't have any other assets or liabilities 

Suppose that checkable deposits and reserves pay 0 interest 

The interest rate on treasuries is 3%

The loan pays 7%

Time deposits pay 5%

How much profit does the bank make?

What is the bank's return on assets?

  1. 3.2%
  2. 2.9%
  3. 3.7%
  4. 2.6%
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