The bank you own has the same balance sheet as given initially in number 7:...
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Accounting
The bank you own has the same balance sheet as given initially in number 7:
Suppose that the return on assets (ROA) is 4%. Calculate the return on equity (ROE). Suppose your bank capital increases to $40 while deposits fall to $60.
Assuming the ROA is fixed, what happens to ROE?
Explain the benefits and costs of a bank increasing its capital.
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