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he held in his transactional bank account in West Bank and used to buy the shares. North Bank issues $50,000 capital notes to West
he held in his transactional bank account in West Bank and used to buy the shares. North Bank issues $50,000 capital notes to West Bank (transaction A) and issues $20,000 shares to Mr Williams (transaction B), a rich retiree who had received income on its past investments, income that North Bank makes a $870,000 loan to its depositor Bob the Builder, a construction firm that needs to renew its stock of trucks. (transaction C) a) Draw the changes in North bank's balance sheet and in West Bank's balance sheet resulting from transactions A, B and C. [Clearly indicate the name of the item affected in the balance, the change in the value and between brackets the letter of the transaction.] No explanation is required. (5 marks) b) Represent the diagram of flow of funds for all the transactions above. [Clearly indicate the financial instruments, the financial markets, the type of money involved, the creation and destruction where relevant] Do NOT refer to SSU, DSU or financial intermediary. Do NOT include the central bank. No explanation is required. (4 marks)
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