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2. First, distinguish between the balance sheet statement and a flow-of-funds statement.

Second, from the following information regarding the revenues, expenses, assets and liabilities of a hypothetical Canadian chartered bank, for the year 2018, determine the banks return on assets (ROA), its return on equity (ROE), its retained earnings (i.e., undistributed business profits); its liquidity (liquid asset) ratio; the banks equity multiplier; its capital adequacy (leverage) ratio; and its sensitivity to market risk ratio. Lastly, construct BOTH the banks balance sheet statement for the end of the year, 2018 and its income-expenditure statement for that year: Salaries and employee benefits..... $180,000; Interest expense on deposits..... $270,000; Interest income from loans..... $320,000; Investment income from Government of Canada bonds.....$75,000; Interest on non-deposit borrowing.....$30,000; Applicable income taxes..... $150,000; Occupancy costs.....$21,000; Provision for loan losses.....$52,000; Miscellaneous expenses..... $8,000; Interest income on municipal securities..... $86,000; Service charges on deposits.... $210,000; Miscellaneous operating revenues..... $130,000; Bank equity capital.....$70 million; Demand (checking) deposits accounts .....$100 million; Savings deposit accounts.....$150 million; Time (fixed term) deposit accounts.....$300 million; Advances (loans) from the central bank.....$12 million; Cash reserves.....$20 million; Other assets.....$150 million; Real estate [i.e., mortgage] loans.....$80 million. Government of Canada securities.....$25 million; Commercial and industrial loans.....$300 million; Other liabilities.....$38 million; Municipal securities.....$55 million; Loans to individuals.....$40 million.

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