The more bank capital the bank holds on its balance sheet, the better off are its equity holders. Is this true, false or uncertain? Explain.
2.) Suppose that the First National Bank has the following balance sheet position and that the required reserve ratio is 15 percent.
Assets
Liabilities
Reserves
$40 million
Deposits
$200 million
Loans
$160 million
Bank Capital
$20 million
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