Question

Zitibank has deposits of $600 million. it holds reserves of $50 million and has purchased government bonds worth $200 million. the bank's loans, if sold at current market value, would be worth $800 million. what does zitibank's net worth equal?

A. $240 million
B. $450 million
C. $980 billion
D. $200 million

Answer 1

Tje correct answer is option B. ZitiBank's net worth is calculated by subtracting its total liabilities (deposits) from its total assets (reserves, government bonds, and loans), resulting in a net worth of $450 million, which corresponds to option B.

Step-by-step explanation:

The student's question deals with determining the net worth of ZitiBank based on the information provided. ZitiBank has deposits of $600 million, which are considered liabilities. On the asset side, it holds reserves of $50 million, has purchased government bonds worth $200 million, and has made loans worth $800 million at current market value. To calculate the net worth of ZitiBank, we need to subtract the total liabilities from the total assets. The total assets are the sum of reserves, government bonds, and loans, which equals $1050 million ($50 million + $200 million + $800 million). The total liabilities are the deposits, which sum up to $600 million. Subtracting the total liabilities from the total assets gives us a net worth of $450 million ($1050 million - $600 million). Therefore, the correct option is B. $450 million.