4. Assume for US bank the interest rate on loans is 10% and on Treasury bonds 8%. The interest rate on the cost of funds

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4 Assume For Us Bank The Interest Rate On Loans Is 10 And On Treasury Bonds 8 The Interest Rate On The Cost Of Funds 1 (27.27 KiB) Viewed 29 times

4. Assume for US bank the interest rate on loans is 10% and on Treasury bonds 8%. The interest rate on the cost of funds through savings is 2% while the Federal funds rate is 5%. Show how each of the following transactions affect on banks financial statements. For each you need to show (a) The component of financial statement that is affected. (b) The direction ((+/-)). (c) The quantum of change. For example see Eg. below. Transactions Asset Eg. The bank issues $100 of new stocks and uses Loans the proceeds to make +$100 loans 1. Britt deposited $200 in checking account. 2. The $300 new loan is made. Liability Stocks +$100 Impact on Income $100 x 5% Expense Profits $5