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Assume the following balance sheet for All Star Bank. What does the balance sheet look like if a customer decides to exercise a $15MM loan
Assume the following balance sheet for All Star Bank. What does the balance sheet look like if a customer decides to exercise a $15MM loan commitment if the bank meets the borrowing need A) by buying (borrowing) liquidity and B) by using internal funds? Assets $30 $90 $50 $170 Cash Loans Securities Total Base Case Liabilities and Equity Deposits $110 Borrowed Funds Equity $20 Total Liab & Equity $170 $40 Cash Loans Securities Total Scenario A - Bank Buys Liquidity Assets Liabilities and Equity Deposits Borrowed Funds Equity Total Liab & Equity Scenario B - Bank Uses Internal Funds Assets Liabilities and Equity Deposits Borrowed Funds Equity Total Liab & Equity Cash Loans | Securities Total Borrowed Funds
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