a. Diamond bank started its first day of operations with $6 million in capital. $100 million in checkable deposits is received. The bank issues a $50 million in commercial loan. If required reserves are 8%, what does the bank balance sheets look like? Ignore any loan loss reserves.

b. Diamond bank decides to invest $45 million in 30-day T-bills. What does the balance sheet look like?

c. After a week, deposits fall by $6 million. What does the balance sheet look like? Are there any problems?

d. Propose one solution to solve the problem identified in question c. What does the balance sheet look like after you implement your solution?

Draw the balance sheet (for each question) and fill in reported Assets and Liabilities.