Homework SourseWhat happens to the value of bank equity when the value of m
What happens to the value of bank equity when the value of mortgages declines?
What happens to the Net Worth of a bank when the value of its assets falls relative to the value of its liabilities? Will the bankers have to adjust assets if the value of the bank\'s liabilities begins to steeply decline? Why and How?
What happens to the value of bank equity when the value of mortgages declines?
What happens to the Net Worth of a bank when the value of its assets falls relative to the value of its liabilities? Will the bankers have to adjust assets if the value of the bank\'s liabilities begins to steeply decline? Why and How?
What happens to the Net Worth of a bank when the value of its assets falls relative to the value of its liabilities? Will the bankers have to adjust assets if the value of the bank\'s liabilities begins to steeply decline? Why and How?
Solution
1) the value of bank equity decreases since the consumers who tool loan will default and not pay back
2)net work is nothing but the difference of assets and liabilites. the net worth will decrease to decrease the fall in assets.no they have to increase the equity since assets can be done in this case anyhing. They have to bring in additional equity
