6. Problems and Applications Q6 Happy Bank starts with $200 in bank capital. It then...
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6. Problems and Applications Q6 Happy Bank starts with $200 in bank capital. It then takes in $1,000 in deposits. It keeps 20 percent of deposits in reserve. It uses the rest of its assets to make bank loans Complete the following balance sheet for Happy Bank. Happy Bank Assets Liabilities Reserves $200 Deposits $1,000 Loans $1,000 Bank Capital $200 Happy Bank's leverage ratio is Suppose that 12 percent of the borrowers from Happy Bank default, and these bank loans become worthless Complete Happy Bank's new balance sheet. Happy Bank Assets Liabilities Reserves Deposits Loans Bank Capital The bank's total assets decline by % , and the bank's capital declines by
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