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Suppose 26 of the securities are mortgage-backed securities. Suddenly we find out that this type of security exists in two versions, good and bad. The
- Suppose 26 of the securities are mortgage-backed securities. Suddenly we find out that this type of security exists in two versions, good and bad. The good are worth what we thought they would be worth. However, the bad is worth only half of what we thought. In addition, when presented with one of these securities, it is impossible to tell good or bad. What is the total value of BOAs securities now?
- What is their bank capital after the mortgage-backed securities lost their value? can be a negative number
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