TD Bank starts with $200 in bank capital. It then accepts $800 in deposits. It keeps...

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Economics

TD Bank starts with $200 in bank capital. It then accepts $800in deposits. It keeps 12.5% of deposits in reserves. It uses therest of its assets to make bank loans.
Show the balance sheet of TD Bank. You may type directlyinto the following T account.
TD Bank
Assets
Liabilities
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What is TD Bankâ€™s leverage ratio.
Suppose that 20 percent of the borrowers from TD Bank defaultand these bank loans become worthless. Show the bankâ€™s new balancesheet.
By what percentage do the bankâ€™s total assets decline? By whatpercentage does the bankâ€™s capital decline? Which change is largerand why?

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4.2 Ratings (515 Votes)

a Pls see table below The bank loans out 875 of deposits ie 700 plus the initial cash it had brought in as capital Assets Amount Liabilities Amount See Answer

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TD Bank

Assets	Liabilities
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