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Belle Bank of Greensboro Balance Sheet 2019 (in $millions) Assets Liabilities Adjusted Adjusted Reserves $110 Deposits $1000 ed Required S Excess Loans $840 Securities $200

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Belle Bank of Greensboro Balance Sheet 2019 (in $millions) Assets Liabilities Adjusted Adjusted Reserves $110 Deposits $1000 ed Required S Excess Loans $840 Securities $200 Bank Capital $200 Other Assets $50 Use the information on the Belle Bank's T-Account above to answer the questions below. Reserve requirement ratio (RRR) = 10% Reserves are a legal requirement and the shortfall must be eliminated. Excess reserves are insurance against the costs associated with deposit outflows. Fill-in the reserves on the assets column 1. (4 points) Imagine a deposit outflow of $150 creating a management problem to the bank. ed What type of Principle of Bank Management should Belle Bank use to solve this problem? (2 point) b. Briefly explain why use this principle. (3 points) c. Which direct strategy do you recommend and why? (3 points) O d. On the second and the fourth columns, adjust the Balance Sheet to reflect the outflow and your solution. (4 points) e. Discuss the implications (costs) for the direct strategy used above by the bank management to solve the problem caused by this outflow. (4 points) English (United States) (3)

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