Determining the riskiness of each asset

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Reference no: EM131774586

Problem: Banking requirements

Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.

Bank's Balance Sheet
Assets		Liabilities and Owners' Equity
Reserves	$200	Deposits	$1,600
Loans	$800	Debt	$250
Securities	$1,000	Capital (owners' equity)	$150

Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the account.

This would also bring the leverage ratio from its initial value of to a new value of .

Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply.

- The riskiness of each asset

- The total value of liabilities

- The size of the monetary base

Reference no: EM131774586

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