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INote that two of the answers below are correct. Pick one. Consider a bank's balance sheet as shown. Suppose that the bank owners believe that

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INote that two of the answers below are correct. Pick one. Consider a bank's balance sheet as shown. Suppose that the bank owners believe that interest rates will soon fall. They want to rearrange their balance sheet so they can profit for minimize loss from this. You are asked to make two specific 55 million recommendations to help accomplish this, both changes being on the asset side of the balance sheet. You get some help from other bank staffers and they put together the following ten recommendations, not all of which even meet the conditions you are to follow. From this list, what specific suggestion would you recommend? [Each suggestion is for two $5 million changes) Assets Liabilities Cash $2 million Checking accounts $65 million 3 month UST $15 million Savings accounts $35 million 2 year UST $25 million 3 mo. CD $15 million Credit card loans $125 million 6 mo. CD $70 million 1 year personal loan $50 million 2 year CD $110 million 5 year auto loans $75 million 5 year CD $20 million 30 year mortgages $38 million 30 day borrowed funds $15 million UST = United States Treasury Securities; CD = certificates of deposit Reduce holdings of 2 year UST and raise holdings of 1 year personal loans. Reduce holdings of 2 year UST and raise holdings of 3 month UST. Reduce holdings of 30 year mortgages and raise holdings of 5 year auto loans. Raise holdings of 5 year auto loans financed by raising 5 year CDs. Raise holdings of cash by liquidating some of the 5 year auto loans. Raise holdings of 30 year mortgages and reduce holdings of credit card loans. Raise holdings of 30 year mortgages financed by raising 5 year CDs. Reduce holdings of credit card loans and reduce holdings of 2 year UST. Raise holdings of credit card loans and raise holdings of 2 year UST. Reduce holdings of 2 year UST and raise holdings of 30 year mortgages

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