Oldhat Financial starts its first day of operations with $9 million in capital. A total of $130 million in checkable deposits are received. The bank makes a $25 million commercial loan and another $40 million in mortgages, with the following terms: 200 standard 30-year, fixed-rate mortgages with a nominal annual rate of 5.25%, each for $200,000. Assume that required reserves are 8%. The bank's balance sheet is shown below: Assets Required reserves Excess reserves Loans $10 $64 $65 million million million Assets Early the next day the bank invests $35 million of its excess reserves in commercial loans. Later that day, terrible news hits the mortgage markets, and mortgage rates jump to 13%, implying a present value of its current mortgage holdings of $99,838 per mortgage. Bank regulators force Oldhat to sell its mortgages to recognize the fair market value. Required reserves $ Excess reserves Loans $ $ Liabilities Checkable deposits Bank capital What does Oldhat's balance sheet look like? (Round your responses to the nearest whole number. Use minus sign to enter negative numbers.) Fill in the blanks in the actual balance sheet as it would look after the sale: million million million $130 million $9 million Liabilities Checkable deposits Bank capital $ S million million
Oldhat Financial starts its first day of operations with $9 million in capital. A total of $130 million in checkable deposits are received. The bank makes a $25 million commercial loan and another $40 million in mortgages, with the following terms: 200 standard 30-year, fixed-rate mortgages with a nominal annual rate of 5.25%, each for $200,000. Assume that required reserves are 8%. The bank's balance sheet is shown below: Assets Required reserves Excess reserves Loans $10 $64 $65 million million million Assets Early the next day the bank invests $35 million of its excess reserves in commercial loans. Later that day, terrible news hits the mortgage markets, and mortgage rates jump to 13%, implying a present value of its current mortgage holdings of $99,838 per mortgage. Bank regulators force Oldhat to sell its mortgages to recognize the fair market value. Required reserves $ Excess reserves Loans $ $ Liabilities Checkable deposits Bank capital What does Oldhat's balance sheet look like? (Round your responses to the nearest whole number. Use minus sign to enter negative numbers.) Fill in the blanks in the actual balance sheet as it would look after the sale: million million million $130 million $9 million Liabilities Checkable deposits Bank capital $ S million million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Oldhat Financial starts its first day of operations with $9 million in capital. A total of $130 million in checkable deposits are received. The bank makes a $25 million
commercial loan and another $40 million in mortgages, with the following terms: 200 standard 30-year, fixed-rate mortgages with nominal annual rate of 5.25%, each
for $200,000. Assume that required reserves are 8%. The bank's balance sheet is shown below:
Assets
Required reserves
Excess reserves
Loans
$10 million
$64 million
$65 million
Assets
Early the next day the bank invests $35 million of its excess reserves in commercial loans. Later that day, terrible news hits the mortgage markets, and mortgage rates
jump to 13%, implying a present value of its current mortgage holdings of $99,838 per mortgage. Bank regulators force Oldhat to sell its mortgages to recognize the fair
market value.
What does Oldhat's balance sheet look like? (Round your responses to the nearest whole number. Use
Fill in the blanks in the actual balance sheet as it would look after the sale:
Liabilities
Checkable deposits
Bank capital
Required reserves $
Excess reserves
$
Loans
$
million
million
million
$130 million
$9 million
minus sign to enter negative numbers.)
Liabilities
Checkable deposits
Bank capital
$ million
$ million
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