QUESTION TWO (a) A bank has a simple balance sheet. The figures are in millions of shillings as follow Assets Cash Securities Loans Total assets Sh 100 1,000 4.000 Sh 5100 Liabilities and equity Deposits Other liabilities Equity Total liabilities and equity Sh 4,000 500 600 Sh 5100 The The bank's liquidity manager needs cash to meet some unanticipated loan demand. loan officer has sh. 600 million in loans that she wants to make. Required (i) If asset conversion method is used and securities are sold to provide money for the loans, present the new look balance sheet. What has happened to the size of the bank? Explain your answer (8 marks) If liability management strategy is used to provide funds for the loan, present the new look balance sheet for the bank. What happens to the size of the bank? Explain your answer. (ii) (7 marks) Explain any FIVE types of regulation and supervision that have been imposed on chartered banks in Kenya b) (10 marks) [Total: 25 marks] QUESTION TWO (a) A bank has a simple balance sheet. The figures are in millions of shillings as follow Assets Cash Securities Loans Total assets Sh 100 1,000 4.000 Sh 5100 Liabilities and equity Deposits Other liabilities Equity Total liabilities and equity Sh 4,000 500 600 Sh 5100 The The bank's liquidity manager needs cash to meet some unanticipated loan demand. loan officer has sh. 600 million in loans that she wants to make. Required (i) If asset conversion method is used and securities are sold to provide money for the loans, present the new look balance sheet. What has happened to the size of the bank? Explain your answer (8 marks) If liability management strategy is used to provide funds for the loan, present the new look balance sheet for the bank. What happens to the size of the bank? Explain your answer. (ii) (7 marks) Explain any FIVE types of regulation and supervision that have been imposed on chartered banks in Kenya b) (10 marks) [Total: 25 marks]