8) Explain the primary difference between the "payoff" and the "purchase and assumption" methods of handling failed banks.

9) Explain the role of a collateral in the credit market. Is it helpful?

10) You are the manager of a bank. It has the following balance sheet:

Assets Liabilities

Reserves $ 100 million Checkable deposits $400 million

Securities 100 million

Loans 300 million Bank capital 1000 million

If the required reserve ratio is 15%, what actions should the bank manager take if there is an unexpected deposit outflow of $80 million?