A fictional bank has deposits equal to ₹5000 crores and reserves equal to ₹6000 crores. What is the net worth of this bank ?
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : ₹1000 crores
The net worth of a bank, also known as shareholders' equity or book value, is the difference between its total assets and total liabilities. It represents the residual interest of the bank's owners (shareholders) after deducting all its liabilities from its assets.
Net Worth = Assets - Liabilities
Assets of Bank = reserves
Liabilities of Bank = Deposits by customers
Net Worth = 6000 crores - 5000 crores
Net Worth = 1000 crores