a) Bank A has the following balance sheet (in millions):AssetsCashSecuritiesLoansTotal assets$51055$70Liabilities and equityDepositsEquityTotal liabilities and equityThe bank is expecting a $12 million net deposit drain.$628$70i) Show the new balance sheet if the bank uses purchased liquidity management to offset the expecteddrain. Also, explain the effect on the size and composition of assets and liabilitiesii) Show the new balance sheet if the bank uses stored liquidity management to offset the expecteddrain. Also, explain the effect on the size and composition of assets and liabilities.

Store Liquidity Management As per the store liquidity management if bank are facing some liquidity…

a) Bank A has the following balance sheet (in millions): Assets Cash Securities Loans Total assets $5 10 55 $70 Liabilities and equity Deposits Equity Total liabilities and equity The bank is expecting a $12 million net deposit drain. $62 8 $70

a) Bank A has the following balance sheet (in millions): Assets Cash Securities Loans Total assets $5 10 55 $70 Liabilities and equity Deposits Equity Total liabilities and equity The bank is expecting a $12 million net deposit drain. $62 8 $70

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

a) Bank A has the following balance sheet (in millions):
Assets
Cash
Securities
Loans
Total assets
$5
10
55
$70
Liabilities and equity
Deposits
Equity
Total liabilities and equity
The bank is expecting a $12 million net deposit drain.
$62
8
$70
i) Show the new balance sheet if the bank uses purchased liquidity management to offset the expected
drain. Also, explain the effect on the size and composition of assets and liabilities
ii) Show the new balance sheet if the bank uses stored liquidity management to offset the expected
drain. Also, explain the effect on the size and composition of assets and liabilities.

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