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FORUM DESCRIPTION (a) Explain the following bank management activities: liquidity management, asset management, liquidity management, capital adequacy management, credit risk management, interest-rate risk management Consider
FORUM DESCRIPTION (a) Explain the following bank management activities: liquidity management, asset management, liquidity management, capital adequacy management, credit risk management, interest-rate risk management Consider the Loan Shark Bank (LSB) with the balance sheet shown below, which is subject to a 10 percent required reserves ratio. Use this nformation to answer parts (b) and (c) Assets Liabilities $100 Reserves Loans Securities $20 $80 $30 Deposits Loans from Comm.Banks Loans from the Fed Bank Capital $10 s 10 s 10 (b) Given the intormation about LSBconsider the follow ng two transactions First, John deposits S2 in LSB. Then, Juan withdraws $5 from his savings account at LSB. Use a T-account to represent the changes in the LSB balance sheet from each transaction-that is, you need to show two T-accounts. Then, show LSB balance sheet after both transactions have taken place (c) Given the information about LSB-discard the transactions from part (b)-could LSB remain in business if it suffers a 10 percent loss in its securties? Explain your answer and show the resulting LSB balance sheet if this scenario occurs
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