Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.
Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $175 Deposits $1,400 Loans $700 Debt $225 Securities $875 Capital (owners' equity) $125
Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and the account. This would also bring the leverage ratio from its initial value of _ to a new value of _.
Which of the following is true of the capital requirement?
a. Its intended goal is to protect the interests of those who hold equity in the bank.
b. The amount of capital required depends on the type of assets the bank holds.
c. It specifies a minimum leverage ratio for all banks.
d. Grade It Now Save & Continue Continue without saving

Question

05-05-2020
Business

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Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.
Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $175 Deposits $1,400 Loans $700 Debt $225 Securities $875 Capital (owners' equity) $125
Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and the account. This would also bring the leverage ratio from its initial value of _ to a new value of _.
Which of the following is true of the capital requirement?
a. Its intended goal is to protect the interests of those who hold equity in the bank.
b. The amount of capital required depends on the type of assets the bank holds.
c. It specifies a minimum leverage ratio for all banks.
d. Grade It Now Save & Continue Continue without saving

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yahayadanjuma55 yahayadanjuma55 · Answer 1 · 2020-05-05T07:43:39+02:00

Answer:

a. Its intended goal is to protect the interests of those who hold equity in the bank

Explanation:

Base on the scenario been described in the question, Its intended goal is to protect the interests of those who hold equity in the bank

Capital requirements are designed to ensure that banks will have sufficient capital to repay the depositors and debtors. A bank's "capital" is the difference between the total value of the bank's assets and its total deposits plus debt. That is, the bank's capital is the money that would be left over if the bank were able to liquidate all of its assets to pay off all of its depositors and debtors.