8. RBC expects a deposit drain of $20 million. Show the Dis balance sheet if the following conditions occur: 1. RBC purchases liabilities to offset this expected drain ( II. The stored liquidity management method is used to meet the expected drain (RBC does not want the cash balance to fall below $5million, and securities can be sold at fair value)
8. RBC expects a deposit drain of $20 million. Show the Dis balance sheet if the following conditions occur: 1. RBC purchases liabilities to offset this expected drain ( II. The stored liquidity management method is used to meet the expected drain (RBC does not want the cash balance to fall below $5million, and securities can be sold at fair value)
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter12: Valuation: Cash-flow Based Approaches
Section: Chapter Questions
Problem 2CIC
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Help with question g.
![Rethinking Banking Corporation (RBC) has the following balance sheet (in million)
LAIBILITIES AND EQUITY ($)
ASSETS ($)
Cash
Deposit
Purchased funds
Equity
Total Liabilities
Loans
Securities
Total Assets
9
95
26
130
75
d. Explain the implications of your answer in (c) above
e. Calculate the financing gap (
f. What is the financing requirement?
40
15
130
RBCS securities portfolio includes $16 million in T-Bills and $10 Million in MUNTEK securities.
RBC has $5million in excess cash reserves (above reserve requirements) with the fed. RBC has
borrowed $22 million in fed funds, $20 million line of credit to borrow in the repo market and
$18 million from fed discount window to meet seasonal demands.
a. What is the RBCs total available liquidity?
b. What is RBCs current uses of liquidity?
c. What is the net liquidity gap?
8. RBC expects a deposit drain of $20 million. Show the Dis balance sheet if the following
conditions occur:
1.
RBC purchases liabilities to offset this expected drain (
II. The stored liquidity management method is used to meet the expected drain (RBC
does not want the cash balance to fall below $5million, and securities can be sold at
fair value)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31211817-c6fc-40e1-a7a5-5f5383d5e7ea%2F05c5c1c8-a6aa-40ee-a8a2-28db235afd71%2Fuzg9sag.jpeg&w=3840&q=75)
Transcribed Image Text:Rethinking Banking Corporation (RBC) has the following balance sheet (in million)
LAIBILITIES AND EQUITY ($)
ASSETS ($)
Cash
Deposit
Purchased funds
Equity
Total Liabilities
Loans
Securities
Total Assets
9
95
26
130
75
d. Explain the implications of your answer in (c) above
e. Calculate the financing gap (
f. What is the financing requirement?
40
15
130
RBCS securities portfolio includes $16 million in T-Bills and $10 Million in MUNTEK securities.
RBC has $5million in excess cash reserves (above reserve requirements) with the fed. RBC has
borrowed $22 million in fed funds, $20 million line of credit to borrow in the repo market and
$18 million from fed discount window to meet seasonal demands.
a. What is the RBCs total available liquidity?
b. What is RBCs current uses of liquidity?
c. What is the net liquidity gap?
8. RBC expects a deposit drain of $20 million. Show the Dis balance sheet if the following
conditions occur:
1.
RBC purchases liabilities to offset this expected drain (
II. The stored liquidity management method is used to meet the expected drain (RBC
does not want the cash balance to fall below $5million, and securities can be sold at
fair value)
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