Question

Stealth bank has deposits of $300 million. It holds reserves of $20 million and has purchased government bonds worth $300 million. The bank's loans, if sold at current market value, would be worth $600 million. What does Stealth bank's net worth equal?

A. $20 million
B. $620 million
C. $1.22 billion
D. $920 million

Answer 1

The net worth of Stealth Bank is $1.22 billion. A bank's net worth is defined as its total assets minus its total liabilities. To calculate the net worth of Stealth Bank, we need to determine its assets and liabilities.

Step-by-step explanation:

A bank's net worth is defined as its total assets minus its total liabilities. To calculate the net worth of Stealth Bank, we need to determine its assets and liabilities.

Assets:

Deposits: $300 million

Reserves: $20 million

Government bonds: $300 million

Loans: $600 million

Liabilities:

None mentioned in the question

Net Worth = Assets - Liabilities

Therefore, the net worth of Stealth Bank is $1.22 billion (300 + 20 + 300 + 600 = 1220 million).

Stealth Bank's net worth is calculated by subtracting total liabilities from total assets, resulting in a net worth of $620 million.

The net worth of Stealth Bank can be calculated by subtracting its total liabilities from its total assets. The assets of Stealth Bank include reserves worth $20 million, government bonds worth $300 million, and the current market value of its loans, which is $600 million. The only liability mentioned is the deposits of $300 million. To find the net worth, we would add all the assets together ($20 million + $300 million + $600 million = $920 million) and then subtract the total deposits ($920 million - $300 million = $620 million).