Final answer:
A bank's net worth is synonymous with its capital, which is its total assets minus total liabilities. Required reserves are not the net worth but the mandatory reserves a bank must hold as per Federal Reserve regulations.
Step-by-step explanation:
The question concerns the net worth of a bank, which is synonymous with its capital. A bank's assets include various elements such as cash in vaults, reserves held at the Federal Reserve Bank, loans made to customers, and bonds.
However, the net worth of a bank is calculated by subtracting its total liabilities from its total assets. For instance, if the Safe and Secure Bank has assets worth $11 million and liabilities totaling $10 million, then its net worth, or capital, would be $1 million.
Having a positive net worth is indicative of a financially healthy bank. This means option 'c', capital, is the correct answer to the student's question.
Required reserves, on the other hand, are the minimum amount of reserves a bank must hold, as mandated by the Federal Reserve, and is not synonymous with the bank's net worth.