In page 2, you can find the balance sheet of J.P. Morgan Chase. Using it and your knowledge of financial crises, of balance sheet analysis and of asymmetric information in the financial markets, answer the questions below: a) Compute the share of mortgage-backed securities in the total assets of the bank in 2015, 2016, 2017, 2018 and 2019. (15 points) b) How has this share evolved over time? (5 pts) c) In which financial crisis were mortgage-backed securities involved ? (5 pts) d) Define mortgage-backed securities. (5 pts) e) Describe the 2007-2009 financial crisis (20 pts): Hint: Make sure to link your description to the different stages usually involved in the financial crises and describe the asymmetric information problems Midterm 2 - Part 2 A A A 0 To > :: 349 Assets Fiscal year is January-December. All values USD Million 2019 Total Cash & Due from Banks 2018 2017 2016 2015 21,704 Investments - Total 22,324 25,898 23,873 20,49 1.455,848 1,385,482 1,344,093 1,355,955 Trading Account Securities 1.289,483 411 103 413,714 Federal Funds Sold & Securities Purchased 381,844 372.13 343,839 388,915 433,583 198,422 326,376 311,296 Federal Funds Sold 11 84 319 Securities Bought Under Resale Agreement 64 685 388,904 433,499 198, 103 326 312 310,611 Treasury Securities 139,487 56,059 22,745 44,101 11,036 State & Municipal Securities 34,607 42,547 46,711 46,067 46,35 Mortgage Backed Securities 201.436 137 127 149,845 157,613 181,959 Other Securities 22,709 126,095 135,769 41,278 51.482 Other Investments 257,591 276,357 408,757 368,39 343,521 Net Loans 946.646 972,109 913,742 880,989 823,744 Commercial & Industrial Loans 451,743 442,313 405,406 386,02 359,911 Consumer & Installment Loans 264,926 255,237 296,356 251,123 236,799 Real Estate Mortgage Loans 236,036 275,016 225,584 254.994 238,943 Loan Loss Allowances (Reserves) -13,123 - 13,445 -13,604 -13,555 Real Estate Other Than Bank Premises 238 226 265 325 Net Property, Plant & Equipment 48,613 35,434 14,159 14,131 14 362 Other Assets (including Intangibles) 148,533 146,7451 167,714 165,973 158,335 Other Assets 99,891 98,526 119,352 117,823 109,995 Intangible Assets 48,642 48,21948,362 48,15 48.34 Interest Receivables 22,861 73,267,729 52,33 46,605 Total Assets 2,687,379 2,622,532 2,533,600 2.490.9222 351,698 Liabilities & Shareholders' Equity All values USD Millions 2019 2018 2017 2016 2015 Total Deposits 1,562,431 1.470,666 1,443,982 1.375,179 1,279,715 Demand Deposits 395,662 386,709 393,645 400,831 392,721 Savings/Time Deposits 876,156 813 881 793,618 737,949 663,004 Foreign Office Deposits 290,608 270,026 256,719 236,399 223.99 Total Debt 544,013 553,868 520,879 534,401 519,875 ST Debt & Current Portion LT Debt 264,482 251,596 210,718 200,109 245,035 Current Portion of Long Term Debt 38,283 55,69 Short Term Debt 226.199 251,596 210,718 200,109 189,345 Long Term Debt 279,561 302.272 310,161 334,292 274,84 271 056 LT Debt exc. Capitalized Lease 302,222 310,161 334 292 27484 Provision for Risks & Charles 2,8 2,3 318,379 339.183 313,046 327,202 Other Liabilities 304 535 318,379 339,183 313,046 Other Labilities (excl. Defurred income) 327,202 304,535 Total Liabilities 3,427,653 2,366,017 2.2229022236,782 2,101,125 256,515 255,693 254,19 247,573 Total Equity Liabilities & Shareholders Equity 12,688,983 12.622,532 12,533.690 12.490,972 12,351,698 261,33 In page 2, you can find the balance sheet of J.P. Morgan Chase. Using it and your knowledge of financial crises, of balance sheet analysis and of asymmetric information in the financial markets, answer the questions below: a) Compute the share of mortgage-backed securities in the total assets of the bank in 2015, 2016, 2017, 2018 and 2019. (15 points) b) How has this share evolved over time? (5 pts) c) In which financial crisis were mortgage-backed securities involved ? (5 pts) d) Define mortgage-backed securities. (5 pts) e) Describe the 2007-2009 financial crisis (20 pts): Hint: Make sure to link your description to the different stages usually involved in the financial crises and describe the asymmetric information problems Midterm 2 - Part 2 A A A 0 To > :: 349 Assets Fiscal year is January-December. All values USD Million 2019 Total Cash & Due from Banks 2018 2017 2016 2015 21,704 Investments - Total 22,324 25,898 23,873 20,49 1.455,848 1,385,482 1,344,093 1,355,955 Trading Account Securities 1.289,483 411 103 413,714 Federal Funds Sold & Securities Purchased 381,844 372.13 343,839 388,915 433,583 198,422 326,376 311,296 Federal Funds Sold 11 84 319 Securities Bought Under Resale Agreement 64 685 388,904 433,499 198, 103 326 312 310,611 Treasury Securities 139,487 56,059 22,745 44,101 11,036 State & Municipal Securities 34,607 42,547 46,711 46,067 46,35 Mortgage Backed Securities 201.436 137 127 149,845 157,613 181,959 Other Securities 22,709 126,095 135,769 41,278 51.482 Other Investments 257,591 276,357 408,757 368,39 343,521 Net Loans 946.646 972,109 913,742 880,989 823,744 Commercial & Industrial Loans 451,743 442,313 405,406 386,02 359,911 Consumer & Installment Loans 264,926 255,237 296,356 251,123 236,799 Real Estate Mortgage Loans 236,036 275,016 225,584 254.994 238,943 Loan Loss Allowances (Reserves) -13,123 - 13,445 -13,604 -13,555 Real Estate Other Than Bank Premises 238 226 265 325 Net Property, Plant & Equipment 48,613 35,434 14,159 14,131 14 362 Other Assets (including Intangibles) 148,533 146,7451 167,714 165,973 158,335 Other Assets 99,891 98,526 119,352 117,823 109,995 Intangible Assets 48,642 48,21948,362 48,15 48.34 Interest Receivables 22,861 73,267,729 52,33 46,605 Total Assets 2,687,379 2,622,532 2,533,600 2.490.9222 351,698 Liabilities & Shareholders' Equity All values USD Millions 2019 2018 2017 2016 2015 Total Deposits 1,562,431 1.470,666 1,443,982 1.375,179 1,279,715 Demand Deposits 395,662 386,709 393,645 400,831 392,721 Savings/Time Deposits 876,156 813 881 793,618 737,949 663,004 Foreign Office Deposits 290,608 270,026 256,719 236,399 223.99 Total Debt 544,013 553,868 520,879 534,401 519,875 ST Debt & Current Portion LT Debt 264,482 251,596 210,718 200,109 245,035 Current Portion of Long Term Debt 38,283 55,69 Short Term Debt 226.199 251,596 210,718 200,109 189,345 Long Term Debt 279,561 302.272 310,161 334,292 274,84 271 056 LT Debt exc. Capitalized Lease 302,222 310,161 334 292 27484 Provision for Risks & Charles 2,8 2,3 318,379 339.183 313,046 327,202 Other Liabilities 304 535 318,379 339,183 313,046 Other Labilities (excl. Defurred income) 327,202 304,535 Total Liabilities 3,427,653 2,366,017 2.2229022236,782 2,101,125 256,515 255,693 254,19 247,573 Total Equity Liabilities & Shareholders Equity 12,688,983 12.622,532 12,533.690 12.490,972 12,351,698 261,33