A bank balance sheet consists of only the following items:
$$\begin{array} { l r }
\text { Deposits } & \$ 1,000 \
\text { Reserves } & \$ 100 \
\text { Securities } & \$ 400 \
\text { Debt } & \$ 500 \
\text { Loans } & \$ 2,000
\end{array}$$
What is the value of bank capital?
A)-$1,000
B)+$500
C)+$1,000
D)+$1,500

Question

A bank balance sheet consists of only the following items:
$$\begin{array} { l r } 
\text { Deposits } & \$ 1,000 \
\text { Reserves } & \$ 100 \
\text { Securities } & \$ 400 \
\text { Debt } & \$ 500 \
\text { Loans } & \$ 2,000
\end{array}$$
What is the value of bank capital?
A)-$1,000
B)+$500
C)+$1,000
D)+$1,500

Quizplus · Accepted Answer

Bank capital is calculated as total assets minus total liabilities. Assets are reserves ($100), securities ($400), and loans ($2,000), totaling $2,500. Liabilities are deposits ($1,000) and debt ($500), totaling $1,500. Thus, bank capital is $2,500 - $1,500 = $1,000.

A Bank Balance Sheet Consists of Only the Following Items