A bank that has liabilities of $150 billion and a net worth of $20 billion must have: A. excess reserves of $130 billion. B. assets of $150 billion. C. excess reserves of $150 billion. D. assets of $170 billion.

Question

Alessandra Noble

Business

10 January, 13:49

A bank that has liabilities of $150 billion and a net worth of $20 billion must have: A. excess reserves of $130 billion. B. assets of $150 billion. C. excess reserves of $150 billion. D. assets of $170 billion.

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Answers (1)

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Snowy · Answer 1

Assets of $170 billion.

Explanation:

Net worth of a bank is calculated by deducting total Liabilities from total assets value. It is the net asset value of the bank. Deposits are not being considered because they have already been added in the liabilities value.

Net worth of the bank = Total Assets - Total Liabilities

$20 billion = Total Asset - $150 billion

Total Asset = $20 billion + $150 billion

Total Asset = $170 billion