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A financial institution has the following balance: Assets Cash Government securities Other Assets Total Balance Sheet (in million) Liabilities 28 Deposits 140 18 Borrowed
A financial institution has the following balance: Assets Cash Government securities Other Assets Total Balance Sheet (in million) Liabilities 28 Deposits 140 18 Borrowed Funds 30 164 Equity 40 210 Total 210 In 2020 COVID-19 increased the liquidity needs of a bank servicing the affected community as depositors withdrew deposits to the value of $64 million. Withdrawal of Deposits Assets Cash Government securities Other Assets Total Liabilities Deposits Borrowed Funds Equity Total Would you recommend this bank rely more on asset liquidity or liability liquidity to meet these additional requirements? Give reasons. Show how you would manage the bank's liquidity position. What other information that the financial institution would possess would improve your decision. Be specific.
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