Answered You can hire a professional tutor to get the answer.
The World's Best Bank (WBB) is the only bank in the country and its T-account is:
- The World's Best Bank (WBB) is the only bank in the country and its T-account is:
-----------------------------------------------------------------------------------------------------------------------
Assets (in $ million) Liabilities (in $ million)
-----------------------------------------------------------------------------------------------------------------------
Reserves 300 Deposits 600
Loans 200
Cash held in overseas banks 100 Debt 200
Securities 300 Capital (owner's equity) 100
Going back to the original T-account (i.e. the withdrawal of part d. did NOT take place), Suppose that due to the mortgage crisis some people default on their loans, and their value thus decreases by 50. What happens to the leverage ratio (assuming the bank makes no changes in reserves)? (2 marks)
