Citicorp is one of the largest bank holding companies in the world. In addition to making loans, it has significant trading activities. During 1993, 1994, and 1995 the company reported this income information:

The following additional information was available regarding the company's availablefor-sale portfolio:

\section*{Instructions}

(a) Comment on the importance of securities gains and losses as a part of Citicorp's income. Does the income provided by these activities appear to be stable or volatile?

(b) Citicorp has a significant available-for-sale portfolio. How much, and by what percentage, could the company have increased its 1995 income by selling its "winners" while holding its "losers"? Why do you suppose it chose not to do this?

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Trading account gains and losses Gains and losses on available-for-sale securities Net income 1995 ($ in millions) 1994 1993 $ 559 132 $ 158 200 $ 939 94 3,464 3,366 2,219