Why such a small decline in asset value is a major concern

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Suppose a bank has total assets that consist of $2.85 billion in cash and $23.40 billion in loans. It has total liabilities of $24.15 billion and total equity of $2.10 billion. Create a simple balance sheet and determine how much equity capital the bank has a percentage of assets. Rewrite the balance sheet after a 3%decline in the value of the bank's loan portfolio. Explain/show mathematically why such a small decline in asset value is a major concern.

Reference no: EM13293646

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