1. Based on the information provided below about banks A and B, compute for each bank its return on assets
(ROA), return on equity (ROE) and leverage ratio.
a. Bank A has net profit after taxes of $1.8 million and the balance sheet below:
Bank A
(in millions)
Assets Liabilities
Reserves $5 Deposits $100
Loans $70 Borrowing $10
Securities $45 Bank Capital $10
b. Bank B has net profit after taxes of $0.9 million and the balance sheet below:
Bank B
(in millions)
Assets Liabilities
Reserves $7.5 Deposits $75.0
Loans $55.0 Borrowing $3.0
Securities $23.5 Bank Capital $8.0
2. Explain how a bank uses liability management to respond to a deposit outflow. Why do banks prefer liability
management to asset management?
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FRED QUESTIONS
1. Are U.S. banks increasing in size? Use FRED to plot since 1984 on a quarterly basis the number of U.S.
commercial banks (FRED code: USNUM) and, on the right scale, the volume of their deposits (FRED code:
DPSACBM027SBOG). Download the data and compute the average deposit size of banks in the first quarters
of 1984 and 2016.
2. What share of U.S. banks fail? Plot since 2000 the fraction (in percent) of bank failures (FRED code:
BKFTTLA641N) relative to the number of banks (FRED code: USNUM). Comment on the timing and the
proportion of failures. Were most of the failing banks large or small?
Sample Solution
Canada’s history is a very important thing to understand when you are in Canada. You will notice is a country that has been under ethnocentrism since colonial times. In this case, we have the first nation people who are the native people and the immigrant who came to trade with the native people. Until today the conflict on the territory which the native and the European people share is unclear as the treaties that were made at the time were not clear to the native people. Treaties are agreements that are made by two groups to make peace between them. In this case, it is between the first nation people and the Europeans settlements. Unceded land is a territory which is a large section of British Columbia, Montreal and other parts of Canada. It is the land that was neither acquired or surrendered to the crown. It is also known as the crown land. The territory belongs to the first nation people who agreed to share it with the Europeans but not to give it up to them. However, the efforts being done to bring the people together and come up with understanding on the unceded territory, the Canadian government has failed as agreed terms on the Royal Proclamation act of 1763.
Following that my opinion on the claim about the treaties that weren’t clear to the first nation is the government of Canada should compensate and amend or interpret it in a modern way. Solutions should not be from 200 years old ‘agreement’ between parties that they don’t exist anymore. However, The government needs to provide drastic measures so that the treaty rights are more clearly defined. This will help people from both parties to get a clear look of the treaty and a solution can be made thus helping both the aboriginal people and the government as well.
Another way of resolving the native issue is to inform and engage the pub