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A bank has $5 million in liquid assets and $95 million in nonliquid assets. Large depositors unexpectedly withdraw $9 million in deposits. To cover the
A bank has $5 million in liquid assets and $95 million in nonliquid assets. Large depositors unexpectedly withdraw $9 million in deposits. To cover the withdrawals the bank sells all of its liquid assets at book value but must sell $7 million at less than their book value of their nonliquid assets to raise the additional funds needs. As a result the bank's equity will Fall $3 million Fall $4 millioI Fall $7 million Remain unchanged Rise $5 million
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