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6. The following is the balance sheet of a DI (in millions): Assets Cash Loans Premises and equipment 3 Total S 2 50 Liabilities and

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6. The following is the balance sheet of a DI (in millions): Assets Cash Loans Premises and equipment 3 Total S 2 50 Liabilities and Equity Demand deposits $50 3Equity Total The asset-liability management committee has estimated that the loans, whose average interest rate is 6 percent and whose average life is three years, will have to be discounted at 10 percent if they are to be sold in less than two days. If they can be sold in 4 days, they will have to be discounted at 8 percent. If they can be sold later than a week, the DI will receive the full market value. Loans are not amortized; that is, principal is paid at maturity. a) What will be the price received by the DI for the loans if they have to be sold in two days. In four days? In a crisis, if depositors all demand payment on the first day, what amount will they receive? What will they receive if they demand to be paid within the week? Assume no deposit insurance. b)

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