Consider a bank that has $8,000,000 in deposits and $1,000,000 in reserves. Suppose it lends out $7,200,000. What are the bank's total assets and stockholders' equity? AMY: This bank has $ in assets, and stockholders' equity is $.

To determine the deposit left after expenses $8,000,000 - $7,200,000 = $800,000

Banks total asset = $1,000,000 + $800,000 = $1,800,000

Banks stockholders equity = asset - liabilities

Since the bank has no liability, then stockholders equity = $1,800,000

For finance, leverage means banks can use reserves to purchase assets, thus increasing future returns on investment.

Consider a bank with $8 million in deposits, and $1 million in reserves. Suppose it lent out $7,2 million,

Net assets of the bank = $8 million + $1 million = $9 million,

and shareholder equity $8 million.

return = 256000/200000 = 128%

loss in equity = - 520000/200000 = - 260%