COG Bank has the following balance sheet (in millions):

Assets Liabilities and equity

Cash $60 Deposits $220

Loans 180 Borrowed funds 80

Securities 100 Equity 40

Total assets $340 Total liabilities and equity $340

One of COG Bank's customers decides to exercise a $30 million loan commitment.

(i) How will the new balance sheet appear if COG uses stored liquidity management to meet the

loan drawdown?(4 marks)

(ii) How will the new balance sheet appear if COG uses purchased liquidity management to meet

the loan drawdown?(4 marks)

(iii) Are the two methods of liquidity management equivalent in their effect on the size of COG

bank? Explain.(2 marks)