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Please show your work so I can learn how it's done, and thanks. Life Is Good Bank or LG Bank has dollar 15 million in
Please show your work so I can learn how it's done, and thanks.
"Life Is Good" Bank or LG Bank has dollar 15 million in Cash and dollar 85 million in loans made. Their total deposit received is dollar 80 million and a net worth of dollar 20 million. Now consider two separate scenarios: Two of their borrowers declared bankruptcy, and Bank LG has no hope of recovering dollar 20 million of loans back. Show Bank LG's Balance Sheet, before and after the adjustments made. What kind of risk did the bank experience? [For example: Credit Risk, or Liquidity Risk, or Interest Rate Risk] Consider a different scenario (ignore above Q#1A). Due to a panic In the financial market, dollar 25 million is withdrawn by customers of LG. Now, Bank LG can liquidate its loan in short notice by receiving 90 cents to a dollar. Show Bank LG's Balance Sheet, before and after the adjustments are made. What kind of risk did the bank experience? (For example: Credit Risk, or Liquidity Risk, or Interest Rate Risk]
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