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we D Question 19 5 pts 1. Consider a bank with the following balance sheet (in Million Dollar): Assets Liabilities and Equity Cash $1,000 Deposits
we D Question 19 5 pts 1. Consider a bank with the following balance sheet (in Million Dollar): Assets Liabilities and Equity Cash $1,000 Deposits $10,000 Non-liquid assets $10.000 Equity (net worth) $1,000 V Total Assets $11,000 Total liabilities and Equity $11,000 Suppose a bank run occurs and depositors massively withdraw 2.000 million Dollars of deposits. The bank firstly uses all of its cash amounts to meet the withdrawal demand. However, they still need to liquidate $2,000 million worth of their non-liquid assets at a "fire sale" price of $1,500 million. What is the effect on the market value of the bank's equity? Is the bank insolvent after the "fire sale"? HTML Editor B IU A A TE 51 x x EN V Go TT12pt Paragraph
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