Question

Stealth bank has deposits of $700 million. It holds reserves of $20 million and haspurchased government bonds worth $350 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank’s assets?

A. $1.3 billion
B. $1.7 billion
C. $970 million
D. $470 million

Answer 1

C. $970 million

Step-by-step explanation:

In order to calculate Stealth bank's assets we need to figure which of the following come under the category of assets,

The deposits of $700 million are not assets as they are liabilities which they have to pay back to the depositors.

The $20 million reserves are assets as that is the money they they have deposited as reserve to the FED.

The $350 million government bonds are assets owned by the bank as they are financial securities owned by the bank

The $600 million market value worth of loans are the bank's assets as they are owed this money by the borrowers.

So the total assets of the bank are reserves + government bonds + loans

= 20 million + 350 million + 600 million