When a bank accepts a new deposit and uses those funds to issue a loan of the exact same amount, its net worth increases because it now holds a new, valuable asset (the loan).
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A commercial bank initially has total assets of 100 units and total liabilities of 80 units. The bank then accepts a new deposit of 50 units from one customer and simultaneously issues a new loan of 50 units to another customer. What is the bank's net worth immediately after these two transactions are completed?
A commercial bank accepts a $10,000 deposit from a customer and simultaneously issues a new loan for $10,000 to another customer. Which statement best explains why the bank's net worth remains unchanged immediately following these transactions?
When a bank accepts a new deposit and uses those funds to issue a loan of the exact same amount, its net worth increases because it now holds a new, valuable asset (the loan).