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I I don't know how to compare, because B has more cash and Treasury securities maybe can't sell it easily, so I think it is
I I don't know how to compare, because B has more cash and Treasury securities maybe can't sell it easily, so I think it is B rather than A.
3. Consider the assets (in millions of two banks, A and B. Both banks are funded by $120 million in deposits and $20 million in equity. Which bank has the stronger liquidity position? Which bank probably has a higher profit? which one is liquid assets? Bank A Asset Cash Treasury securities Commercial loans Total assets $10 40 90 $140 Bank B Assets Cash Consumer loans Commercial loans Total assets $20 30 90 $140 Bank A is more liquid because it has more liquid assets than Bank B, although it has less cash. Bank B probably earns a higher profit because the return on consumer loans should be greater than the return on Treasury securities. However, comparing the loan portfolios is difficult because it is impossible to evaluate the credit risk contained in each portfolio. why BStep by Step Solution
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