If 200 depositors withdraw at t=1, what is the amount of loan the bank needs to sell (in $ of original loan value) in order to meet those withdrawals? Round your answer to at least 2 decimal places.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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M7
Banca Monte dei Paschi di Siena has 300
depositors. Each depositor deposits $150 into the
bank at time t=0. The bank promises each
depositor 8% interest rate. Each depositor can
either withdraw their money at t=1 or t=2. The
bank uses the deposits to issue 2-year simple
loans. If the bank faces a demand for withdrawal at
t=1, it is able to sell its 2-year simple loans at the
original loan value.
If 200 depositors withdraw at t=1, what is the
amount of loan the bank needs to sell (in $ of
original loan value) in order to meet those
withdrawals? Round your answer to at least 2
decimal places.
Transcribed Image Text:Banca Monte dei Paschi di Siena has 300 depositors. Each depositor deposits $150 into the bank at time t=0. The bank promises each depositor 8% interest rate. Each depositor can either withdraw their money at t=1 or t=2. The bank uses the deposits to issue 2-year simple loans. If the bank faces a demand for withdrawal at t=1, it is able to sell its 2-year simple loans at the original loan value. If 200 depositors withdraw at t=1, what is the amount of loan the bank needs to sell (in $ of original loan value) in order to meet those withdrawals? Round your answer to at least 2 decimal places.
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