Question

Stealth bank holds deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. The current market value of the bank's loans is $400 million. What is the value of the bank’s total liabilities?

Answer 1

Answer:

$600 million

Explanation:

Data provided in the question:

Deposits held by the Stealth bank = $600 million

Reserves held by the Stealth bank = $30 million

Government bonds = $80 million

The current market value of the bank's loans = $400 million

Now,

The amount of deposits held by the  Stealth bank  belongs to the depositors

Therefore,

The bank is liable to the amount held in deposits

Thus,

The value of the bank’s total liabilities = Deposits held by the Stealth bank

or

The value of the bank’s total liabilities = $600 million