Question 36 The following is the balance sheet of a depository institution, in millions of dollars: Assets Cash Loans Plant and equipment $2 60 3 Liabilities and equity Demand deposits Covered bonds Equity $60 2 13 In a crisis, if depositors all demand payment on the first day, they receive $ 2 points The asset-liability management committee has estimated that the loans, whose average interest rate is 3.8 per cent and whose average life is 5 years, will have to be discounted at 7.7 per cent if they are to be sold in less than two days. If they can be sold in four days, they will have to be discounted at 6 per cent. If they can be sold later than a week, the depository institution will receive the full market value. Loans are not amortised; that is, the principal is paid at maturity. on a first come, first served basis? Assume no deposit insurance. Save Answer Question 36 The following is the balance sheet of a depository institution, in millions of dollars: Assets Cash Loans Plant and equipment $2 60 3 Liabilities and equity Demand deposits Covered bonds Equity $60 2 13 In a crisis, if depositors all demand payment on the first day, they receive $ 2 points The asset-liability management committee has estimated that the loans, whose average interest rate is 3.8 per cent and whose average life is 5 years, will have to be discounted at 7.7 per cent if they are to be sold in less than two days. If they can be sold in four days, they will have to be discounted at 6 per cent. If they can be sold later than a week, the depository institution will receive the full market value. Loans are not amortised; that is, the principal is paid at maturity. on a first come, first served basis? Assume no deposit insurance. Save