question 22

FIN4 4322.001 The University of Texas of the Permian Bl Management of Financial Institutions ine 29 euestions.cach north four (04l points: Totalof one PART II: Twenty hundred sixteen (116 points (for this sectiom Please answer questions 21 to 24 using t he information given below: Liabilities and Equity Assets Cash Required Reserves 21 Demand Deposits 550 Short-term Securities369 Fed Funds Borrowed 151 89 790 Loans Total 400 E 790 Total 21. If the bank's expected net deposit drain is +4 percent, what is the bank's expected liquidity requirement? A. $7,560 B. $6,040 C. $16,000 D. $22,000 22. What are the possible ways that the bank can meet an expected net deposit drain of +4 percent using stored liquidity management techniques? Liquidate all cash holdings. A. B. Utilize further the Fed funds market C. Liquidate some securities and/or loans D. Liquidate all cash and use more Fed funds. 23. If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds, what policy must the bank follow? Manage liquidity risk exclusively through reserve asset management. Manage liquidity risk exclusively through liability management. Reduce the bank's dependence upon demand deposits. A. B. C. D. Increase interest income by increasing lending If the bank experiences a $50,000 sudden liquidity drain caused by a loan commitment draw down, what will be the impact on the balance sheet if stored liquidity management techniques are used? 24. A. A reduction in cash of $21,000 and an increase in demand deposits of $29,000. B. A reduction in securities and/or current loans totaling $50,000. C. A reduction in cash of $21,000 and a decrease in securities holdings of $29,000. D. A decrease in equity of $50,000