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1. Which bank is better protected against loan defaults? Why? 2. Can people withdraw their deposits from a bank in a relatively short timeframe? 3.

1. Which bank is better protected against loan defaults? Why?

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2. Can people withdraw their deposits from a bank in a relatively short timeframe?

3. Does Preferred Stock leave a banks balance sheet often?

Bank B Reserves Loans Total Bank A 50 Deposits 500 Equity 550 Total 450 100 550 Reserves Loans Total 50 500 550 Deposits Equity Total 500 50 550

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