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1. Systemic Risk Consider the following balance sheets for two hypothetical financial institutions, bank B and bank C. (All numbers in billions) a) Fill in

image text in transcribed 1. Systemic Risk Consider the following balance sheets for two hypothetical financial institutions, bank B and bank C. (All numbers in billions) a) Fill in the missing entries in the balance sheets (denoted ???). b) What is the leverage ratio of each bank? c) Suppose housing prices fall sharply and the mortgage-backed securities held by bank C fall in value to only $500. What happens to bank Cs net worth? d) The shortfall in bank C 's equity means that it is insolvent and goes bankrupt. It is liquidated and its customers receive their deposits back, but bank C cannot repay the loan it received from bank B in full. Assuming bank C repays as much as it can on the loan from bank B, what happens to the net worth of bank B

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