1. A Bank's Balance Sheet
Suppose a group of investors pooled $500,000 and founded Second Republic Bank in Cary, NC. Second Republic
Bank used $50,000 of this to purchase shares in the Richmond Federal Reserve Bank. With the remaining $450,000,
the bank manager purchased a building, furniture, and equipment for the bank.
Use the preceding information to complete the following table showing Second Republic Bank's balance sheet.
Second Republic Bank's Balance Sheet
Assets
Total
Liabilities and Capital
Total
Now Teresa Garcia opens a new checking account at Second Republic Bank and makes an initial deposit of $150,000
in currency. Fill in the following table to show Second Republic Bank's balance sheet just after Teresa's deposit.
Assets
Total
Second Republic Bank's Balance Sheet
Liabilities and Capital
Total
Second Republic's bank manager, Daesun Hwang, is responsible for choosing how much of Teresa's money should be
lent out and how much should be held in reserves. As he makes that decision, he faces a tradeoff between
and