30 May money and banking
FINA3313-Money and Banking Spring Semester 2018
Instructor: Riham K. Hassan
Grade
Student Name
Student ID
Section
Deadline: March 12, 2018 – in class
Instructions:
Students must use and fill this form for all their assignments.
Answers must be written on the enclosed blank pages only. DO NOT ATTACH ANY ADDITIONAL PAGES.
Answers must be hand written and pages must be stapled.
The Assignment must be submitted on the due date (mentioned above) and during the class, or by e-mail (if
the student was absent).
Points will be deducted from the student’s assignment grades for ignoring the above-mentioned Instructions.
pg. 1
1. Rank the following bank assets from most to least liquid:
a. Commercial loans
b. Securities
c. Reserves
d. Physical capital
2. NewBank started its first day of operations with $155 million in capital. A total of $92 million in checkable deposits is received. The bank makes a $28 million commercial
loan and lends another $23 million in mortgage loans. If required reserves are 5.4%,
what does the bank balance sheet look like?
3. The bank you own has the following balance sheet:
Assets Liabilities
Reserves $75 million Deposits $500 million
Loans $525 million Bank capital $100 million
If the bank suffers a deposit outflow of $50 million with a required reserve ratio on
deposits of 10%, what actions should you take?
4. Suppose you are the manager of a bank that has $15 million of fixed-rate assets, $30 million of rate-sensitive assets, $25 million of fixed-rate liabilities, and $20 million of
rate-sensitive liabilities. Conduct a gap analysis for the bank, and show what will
happen to bank profits if interest rates rise by 5 percentage points. What actions
could you take to reduce the bank’s interest-rate risk?
pg. 2
pg. 3
pg. 4
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