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Balance sheet for A Bank. (S in millions) Assets Liability and Equity Cash Loan Security 30 90 50 170 Deposits Borrowed funds Equity 110 40
Balance sheet for A Bank. (S in millions) Assets Liability and Equity Cash Loan Security 30 90 50 170 Deposits Borrowed funds Equity 110 40 20 170 (1) A bank largest customer decides to exercise a $50 million loan commitment. How will the new balance sheet appear if A bank uses the following liquidity risk strategies? Stored liquidity management (b) Purchase liquidity management (2) Assume after the costumer mentioned in Part(1) exercised the loan commitment, the bank use the purchased liquidity management. If there is further expectation of a net deposit drain of $27 million. How will the new balance sheet appear if A bank uses the following liquidity risk strategies? (a) Stored liquidity management (b) Purchase liquidity management
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