Question: The liquidity manager for the Bank of Your Dreams needs

The liquidity manager for the Bank of Your Dreams needs cash to meet some unanticipated loan demand. The loan officer has $600 million in loans that he wants to make. Use the simplified balance sheet provided in the previous problem to answer the following questions:
a. If asset conversion is used and securities are sold to provide money for the loans, what happens to the size of Bank of Your Dreams?
b. If liability management is used to provide funds for the loans, what happens to the size of Bank of Your Dreams?


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  • CreatedOctober 31, 2014
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