Explain the benefits and costs for bank

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Reference no: EM132039604

(a) Suppose that a bank’s total assets are comprised of $85 million of reserves and $125 million of loans and its total liabilities are $140 million in deposits. If the bank’s return-on-assets (ROA) is 1.00%, determine its return-on-equity (ROE).

(b) In your own words, explain the bene?ts and costs for a bank when it decides to increase the amount of its capital.

Reference no: EM132039604

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