A Bank's Assets Are $400 Million and Its Liabilities Are

question 74

Multiple Choice

A bank's assets are $400 million and its liabilities are $300 million,which means that the bank's net worth (bank capital) is ____________________.If the bank's assets rise by 8% at the same time that its liabilities rise by 5%,the bank's new net worth will then be _______________.

• A) $700 million; $713 million
• B) $100 million; $117 million
• C) $100 million; $102 million
• D) $350 million; $360.5 million

---

Definitions:

Demand

The desire combined with the ability to purchase a specific quantity of a good or service at a particular price and time.

Supply

The total amount of a product or service available for purchase at any given price point in a market.

Purchasing Power Parity

A theory in economics that suggests that in the absence of transaction costs and other barriers, identical goods should have the same price in different countries when prices are expressed in a common currency.

Prices

Monetary values assigned to products and services which are determined by the interaction of supply and demand in the market.