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If the president of a bank told you that the bank was so well run that it has never had to call in loans, sell securities, or borrow as a result of a deposit outflow, would you be willing to buy stock in that bank? Why or why not? If a bank doubles the amount of its capital and ROA stays constant, what will happen to ROE? Consider a bank with the following balance sheet: Assets Liabilities Required Reserves $8 million Checkable Deposites $100 million Excess Reserves $3 million Bank capital $6 million T-bills $45 million Commercial Loans $50 million Assess the structural characteristics of the American financial system.
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Unformatted text preview: Evaluate the functions of financial markets, such as the money market, bond market, stock market, and mortgage market, within the financial system. Compare the functions of types of financial institutions to evaluate their role in the financial system. Examine the role of central banks in the financial system to promote economic growth and stability. Contrast the international financial system with that in the United States. Evaluate the impact of risk and regulations in the functions of financial institutions and markets....
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