As shown in the FINA 340 course website, you are asked to adjust your bank's balance...

 

 

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As shown in the FINA 340 course website, you are asked to adjust your bank's balance sheet to include different sources of funding and investment. In Round 4, you have expanded opportunities to lend overseas and fund operations in the Eurodollar market and in Euros. Specifically, you will now be able to 1) make and fund C&I loans denominated in Euros and/or 2) fund your USS operations in Eurodollars. Importantly, the responses in this worksheet are what determine your evaluation on the assignment. Refer to: 1) the instructions in this worksheet, 2) the simulation handbook for previous versions of the exercise provided to you by your instructor (in PDF), and 3) information in the text, Cecchetti, S. G. and Schoenholtz, K (5e). Money, Banking, and Financial Markets. In Round 4 of the Simulation, you are asked to apply the Outcome, determined by chance, to your bank's portfolio. Use the embedded Excel worksheet below to complete the assignment. To enter your values, place the cursor onto the table. Next, right click the mouse. Choose "Worksheet Object, Edit." You will want to save your work and make sure it appears in the Word document you upload. 1. Refer to your End of Round 3 Bank Balance Sheet (previous assignment). With the Outcome determined by chance, complete the spreadsheet by opening it and using the drop down menu to determine your Bank's balance sheet at the Start of Round 4. Start of Round 4 Cash Securities Consumer Loans Residential Mortgage C&I Total Loans Deposits Borrowed Total Financing Total Income and Expense Retained Earnings Cash Securities Lending Cons. Loons" Residential Mortgage C&I Tocal Lending Total Assets Allocation S 137,900.00 $ 4,852,100.00 S 333,504.00 S 333,504.00 $ 333,503.00 $ 1,000,511.00 $ 6,000,000.00 S $ 6,000,000.00 $(1,009,489.00) 1 Balance Sheet: End of Round 3 S 54,585.41 $ 4,864,230.25 0.00% $ 0.25% S 6.00% $ 2.00% $ 3.00% $ 2.00% $ 1.00% $ Deposits Borrowed Total Uabilities S 5,919,326.66 Total L&E S S 333,504.00 333,504.00 S 333,503.00 $ 1.000,511.00 Total Equity Comm Stock Ret Earnings Income Liabilities & Equity $ 12.130.25 $ 20.010.24 $ 6.670.08 $ 10.005.09 $ - $ 6,000,000.00 S S 6,000,000.00 $ 1,000,000.00 S (1,080,673.34) S (80,673.34) 48.815.66 $120.000.00 S 5,919,326.66 LUILINTY $ Expense $120.000.00 In Round 4 you have expanded opportunities to lend overseas and fund your operations in the Eurodollar market and in foreign currencies. Specifically, you will now be able to 1) make and fund C&I loans denominated in Euros and/or 2) fund your US$ operations in Eurodollars. 3. Revise your asset allocation and funding source decisions for Round 4 in light of these new lending and funding alternatives and the possible outcomes (1 through 7). a. Notice that the outcomes in the LMS assume euro interest rates are not perfectly correlated with U.S. dollar interest rates. b. c. d. Open the embedded excel spreadsheet and load the items from the End of Round 3 but also make allocations in euros and Eurodollars. Make sure your balance sheet balances correctly. Exchange Observe that sourcing US$ in the Eurodollar market is generally cheaper than sourcing dollars domestically, with the exception of an occurrence of a liquidity crisis. Also note that all balance sheet items are ultimately denominated in US$. Week 4 Euro C&I Euro Deposits Euro Borrowing Difference Cash Securities Lending Cons. Loans Residential Mortgage C&I* Euro C& Total Lending Total Assets Assets Balance Sheett-4: Start of Round 4 S S $ S S S $ Allocation S 55,680.30 Deposits 4,852,100.00 Borrowed 1.3 1.3 $ 1.3 S 1.3 S 6,009,342.20 Total L&E Liabilities & Equity S Euro Deposit S 333,504.00 Euro Borrowing S 333,504.00 Total Ulabllitles S 433,553.90 Comm Stock S Ret Eamings S 1,100,561.90 Total Equlty S In $ S 600,000.00 600,000.00 1,000,000.00 (1,090,708.70) (90,708.70) 509,291.30 As shown in the FINA 340 course website, you are asked to adjust your bank's balance sheet to include different sources of funding and investment. In Round 4, you have expanded opportunities to lend overseas and fund operations in the Eurodollar market and in Euros. Specifically, you will now be able to 1) make and fund C&I loans denominated in Euros and/or 2) fund your USS operations in Eurodollars. Importantly, the responses in this worksheet are what determine your evaluation on the assignment. Refer to: 1) the instructions in this worksheet, 2) the simulation handbook for previous versions of the exercise provided to you by your instructor (in PDF), and 3) information in the text, Cecchetti, S. G. and Schoenholtz, K (5e). Money, Banking, and Financial Markets. In Round 4 of the Simulation, you are asked to apply the Outcome, determined by chance, to your bank's portfolio. Use the embedded Excel worksheet below to complete the assignment. To enter your values, place the cursor onto the table. Next, right click the mouse. Choose "Worksheet Object, Edit." You will want to save your work and make sure it appears in the Word document you upload. 1. Refer to your End of Round 3 Bank Balance Sheet (previous assignment). With the Outcome determined by chance, complete the spreadsheet by opening it and using the drop down menu to determine your Bank's balance sheet at the Start of Round 4. Start of Round 4 Cash Securities Consumer Loans Residential Mortgage C&I Total Loans Deposits Borrowed Total Financing Total Income and Expense Retained Earnings Cash Securities Lending Cons. Loons" Residential Mortgage C&I Tocal Lending Total Assets Allocation S 137,900.00 $ 4,852,100.00 S 333,504.00 S 333,504.00 $ 333,503.00 $ 1,000,511.00 $ 6,000,000.00 S $ 6,000,000.00 $(1,009,489.00) 1 Balance Sheet: End of Round 3 S 54,585.41 $ 4,864,230.25 0.00% $ 0.25% S 6.00% $ 2.00% $ 3.00% $ 2.00% $ 1.00% $ Deposits Borrowed Total Uabilities S 5,919,326.66 Total L&E S S 333,504.00 333,504.00 S 333,503.00 $ 1.000,511.00 Total Equity Comm Stock Ret Earnings Income Liabilities & Equity $ 12.130.25 $ 20.010.24 $ 6.670.08 $ 10.005.09 $ - $ 6,000,000.00 S S 6,000,000.00 $ 1,000,000.00 S (1,080,673.34) S (80,673.34) 48.815.66 $120.000.00 S 5,919,326.66 LUILINTY $ Expense $120.000.00 In Round 4 you have expanded opportunities to lend overseas and fund your operations in the Eurodollar market and in foreign currencies. Specifically, you will now be able to 1) make and fund C&I loans denominated in Euros and/or 2) fund your US$ operations in Eurodollars. 3. Revise your asset allocation and funding source decisions for Round 4 in light of these new lending and funding alternatives and the possible outcomes (1 through 7). a. Notice that the outcomes in the LMS assume euro interest rates are not perfectly correlated with U.S. dollar interest rates. b. c. d. Open the embedded excel spreadsheet and load the items from the End of Round 3 but also make allocations in euros and Eurodollars. Make sure your balance sheet balances correctly. Exchange Observe that sourcing US$ in the Eurodollar market is generally cheaper than sourcing dollars domestically, with the exception of an occurrence of a liquidity crisis. Also note that all balance sheet items are ultimately denominated in US$. Week 4 Euro C&I Euro Deposits Euro Borrowing Difference Cash Securities Lending Cons. Loans Residential Mortgage C&I* Euro C& Total Lending Total Assets Assets Balance Sheett-4: Start of Round 4 S S $ S S S $ Allocation S 55,680.30 Deposits 4,852,100.00 Borrowed 1.3 1.3 $ 1.3 S 1.3 S 6,009,342.20 Total L&E Liabilities & Equity S Euro Deposit S 333,504.00 Euro Borrowing S 333,504.00 Total Ulabllitles S 433,553.90 Comm Stock S Ret Eamings S 1,100,561.90 Total Equlty S In $ S 600,000.00 600,000.00 1,000,000.00 (1,090,708.70) (90,708.70) 509,291.30

Answer rating: 100% (QA)

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