Consider a bank that has the following balance sheet: Liabes Reserves $200 Deposits $960 Loans $800 Equity $40 Suppose some of the loans made were "bad", so the value of the bank’s loansgoes down by 5%. Which of the following statements is true ?a) The value of equity is $30
b) The value of equity is $20
c) The value of equity is $10
d) The value of equity is $0
e) None of the above

d) The value of equity is $0

Explanation:

Bank loans are classified as performing and nonperforming loans. Nonperforming loans that stay for over a long period (usually 12 months) are considered to be a loss.

When a bank makes a loss on loans (loan goes bad due to nonrepayment) they make provisions and debit the business equity for the loss.

The given loan amount is $800 and the bank had to provision 5% of that amount.

Loss from loan= 800* 0.05= $40

This is deducted from equity= 40- 40= $0

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

answer; microeconomics;