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1. (Bank's Balance Sheet and Bank Run) Today, three persons each deposit $100 in a bank. Each person can withdraw their deposits and interest
1. (Bank's Balance Sheet and Bank Run) Today, three persons each deposit $100 in a bank. Each person can withdraw their deposits and interest of $160 one month after, or $220 if they wait two months after. The bank takes deposits to use as investment - for every $100 invested today, it will receive $1,000 two months from now. But if the bank must interrupt this investment one month from now they would get only $100 for every $100. a) (5 points) Write down the balance sheet of the bank one month from now. Will the bank survive one person withdrawing? b) (5 points) Write down the balance sheet of the bank if two persons are withdrawing one month from now. Will the bank survive two persons withdrawing?
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