14. Consider a commercial bank with $100 million in deposits, $15 million in reserves, $70 million in commercial loans, $10 million in bonds, and $10…

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14. Consider a commercial bank with $100 million in deposits, $15 million in reserves, $70 million incommercial loans, $10 million in bonds, and $10 million in stocks.a) What is the value of the bank’s capital? b) Suppose the economy enters into a recession: defaults on the commercial loans cause themto lose 10% of their value and the value of the bank’s stocks fall by half. Depict thesechanges using a t—account. C) Is the bank illiquid? Is it insolvent? Explain what the implications are for the bank’s practices.