In the "Choice and Consequence" box on "Asset Price Fluctuations and Bank Failures," the authors discuss the relationship between the prices of things like oil and real estate and the solvency of

lending institutions like banks. Consider the two scenarios below.

For each of the following balance sheets, supply the missing entries and then answer the questions that follow.

Assume that Securitas Bank is a large bank in the country of Hyponatremia. The bank's only assets and liabilities at the beginning of the year are given in the following balance sheet:

Securitas Bank Balance Sheet

Assets

Reserves and cash equivalents

Long$-$term investments

Total assets

Liabilities and Stockholders' Equity

Demand deposits

Borrowing from other banks

Stockholders' equity

Assume now that due to an economic downturn, the value the bank's long$-$term investments declines by $20\%.$

Show the resulting situation on the Securitas Bank balance sheet:

Securitas Bank Balance Sheet

Assets

Reserves and cash equivalents

Long$-$term investments

Total assets

Liabilities and Stockholders' Equity

$545$

Demand deposits

Borrowing from other banks

Stockholders' equity

$$300$

$$75$

$300$

$$75$