Manage the liquidity of the Timberlake Bank given the following scenarios. The legal reserve requirement is 5 percent. Use this initial balance sheet to answer each question: Timberlake Bank Balance Sheet (Millions USD) Assets Liabilities Reserves $5 Transaction deposits $100 Securities $10 Nontransaction deposits $250 Loans $385 Borrowings $50 Other assets $100 Capital $100 Totals $500 $500

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Chapter1: Making Economics Decisions
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Manage the liquidity of the Timberlake Bank given the following scenarios. The legal reserve
requirement is 5 percent. Use this initial balance sheet to answer each question:
Timberlake Bank Balance Sheet (Millions USD)
Assets
Liabilities
Reserves $5
Transaction deposits $100
Securities $10
Nontransaction deposits $250
Loans $385
Borrowings $50
Other assets $100 Capital $100
Totals $500
$500
4. A large depositor says that she needs $1.5 million from her checking account, but just for two
days. Otherwise, net outflows are expected to be about zero.
5. Net transaction deposit outflows are zero, but there is a $5 million net outflow from
nontransaction deposits.
Transcribed Image Text:Manage the liquidity of the Timberlake Bank given the following scenarios. The legal reserve requirement is 5 percent. Use this initial balance sheet to answer each question: Timberlake Bank Balance Sheet (Millions USD) Assets Liabilities Reserves $5 Transaction deposits $100 Securities $10 Nontransaction deposits $250 Loans $385 Borrowings $50 Other assets $100 Capital $100 Totals $500 $500 4. A large depositor says that she needs $1.5 million from her checking account, but just for two days. Otherwise, net outflows are expected to be about zero. 5. Net transaction deposit outflows are zero, but there is a $5 million net outflow from nontransaction deposits.
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