Problem set 6 Financial intermediaries l)The three paragraphs below describe the situation of three different financial intermediaries. National Bank of Hazard. This bank has taken s4 billion in checkable deposits. That is, it has borrowed $4 billion in the form of checkable deposits) It has also borrowed sl billion through overnight loans. Its has $1 billion in cash in its vault, $2 billion in short-term Us. Treasury bills, has lent $5 billion in long-term loans to businesses. Lizard Brothers Investment Bank. This investment bank has borrowed s2 billion by issuing long-term bonds, and $3 billion through overnight loans. Its only assets are $6 billion in long-term U.S. Treasury bonds. Edward Bear Investment Bank. This investment bank has borrowed $2 billion from other banks in long- term loans, and $3 billion through overnight loans. Its only assets are $4 billion in Treasury bills. a) For each institution, fill out the table below. Capital Secondary reserves Natl. Bank of Hazard s s Lizard Brothers Edward Bear b) One of these institutions is insolvent. Which one? b) One of these institutions is solvent and its assets are perfectly liquid, but it is subject to interest-rate risk. Which one