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Consider a bank that initially has the following balance sheet:

Assets ($millions)	Liabilities ($millions)
Reserves	120	Deposits	1000
Loans	1000	Borrowings	300
Securities	280	Bank Capital	100

a) Suppose that Donald Trump withdraws $30 million of deposits from this bank. If the bank faces a required reserve ratio of 10%, what actions can the bank take to bring it back into compliance with its reserve requirements?

b) Suppose that the bank's regulators required the bank to raise its bank capital/assets ratio. How can the bank accomplish this?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9799321

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