Suppose again that Melvin's Bank starts with the balance sheet in Table. Then the bank sells $10
Question:
a. What is the immediate effect on the balance sheet?
b. After the loan sale, what additional transactions is the bank likely to make? What will the balance sheet look like after these transactions?
Transcribed Image Text:
(A) Initial Balance Sheet (B) Balance Sheet After $50 Withdrawal Assets Liabilities and Net Worth Assets Liabilities and Net Worth Reserves 10 Checking Deposits Securities 30 Nontransaction Deposits 0 Securities0 Nontransaction Deposits 0 Loans 80 Net Worth TOTAL 120 TOTAL 50 Rs 0 Checking Deposits 20 Loans 60 120 TOTAL 60 TOTAL 50 Net Worth 10 60
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