Given below is the balance sheet for the Bank of New Providence:
| Assets ($1,000,000s) | Liabilities ($1,000,000s) | ||
|---|---|---|---|
| Cash | 52 | Deposits | 650 |
| T-bills and Bonds | 257 | Long-term debt | 326 |
| Loans to Other Banks | 95 | Equity | 88 |
| Commercial Loans | 364 | ||
| Mortgages | 296 | ||
| Total | 1,064 | Total | 1,064 |
The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the Bank’s reserve as a percent of deposits, and is it sufficient?
A) No; 4.9%
B) Yes; 8.0%
C) Yes; 15.9%
D) Insufficient data to determine.
Given below is the balance sheet for the Bank of New Providence:
| Assets ($1,000,000s) | Liabilities ($1,000,000s) | ||
|---|---|---|---|
| Cash | 52 | Deposits | 650 |
| T-bills and Bonds | 257 | Long-term debt | 326 |
| Loans to Other Banks | 95 | Equity | 88 |
| Commercial Loans | 364 | ||
| Mortgages | 296 | ||
| Total | 1,064 | Total | 1,064 |
The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the Bank’s EM?
