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Economics

Consider the two banks and their balance sheets below. For each bank, calculate its return on equity (ROE) and leverage ratio

a. Bank A has net profit after taxes of $1.8 million and the balance sheet below:

Bank A (in millions) Assets Liabilities

Reserves $5 Deposits $100

Loans $70 Borrowing $10

Securities $45 Bank Capital $10

b. Bank B has net profit after taxes of $0.9 million and the balance sheet below:

Bank B (in millions) Assets Liabilities

Reserves $7.5 Deposits $75.0

Loans $55.0 Borrowing $3.0

Securities $23.5 Bank Capital $8.0

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91229926

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