1. Suppose that the First National Bank has the following balance-sheet position and that the required reserve ratio on deposits is 20%.

Assets	Liabilities
Reserves Tk. 25m. Loans Tk. 75m. Securities Tk. 10m.	Deposits Tk. 100m. Bank Capital Tk. 10m.

Questions:

1. If the bank suffers a deposit outflow of Tk. 6m. what will its B/S now look like? Should the bank make any adjustment in its B/S? Why?

1. Suppose, the bank now is hit by another Tk. 4m. deposit outflow. What will its B/S position look like now? Should the bank make any adjustment in its B/S? Why?

1. If the bank satisfies its reserves requirements by selling off securities, how much will it have to sell? Why?

1. If after selling off the securities, the bank is now hit by another Tk. 10m of withdrawals of deposits and it sells off all its securities to obtain reserves, what will its B/S look like? If the bank is now unable to call in or sell any of its loan and no one is willing to lend funds to this bank, then what will happen to the bank and why?