1. Banks Balance Sheets (The answers in relative lecture videos) a) Loans are listed as assets or...
Question:
1. Bank’s Balance Sheets (The answers in relative lecture videos)
a) Loans are listed as assets or liabilities of a bank?
b) What are loans key characteristics? List different types of loans?
c) Please rank from high to low the liquidity of reserves, securities and loans for a bank.
2. Liquidity Risk
Your bank has the following balance sheet:
Assets Liabilities (unit in million)
Reserves $50 Checkable deposits $200
Securities 50
Loans 150 Bank capital 50
a) What is the definition of liquidity risk?
b) If there is an unexpected deposit outflow of $50 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk?
Assets Liabilities
Reserves $_____ Checkable deposits $________
Securities _____
Loans _____ Bank capital ____
c) If there is an unexpected deposit outflow of $100 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk?
Assets Liabilities
Reserves $_____ Checkable deposits $________
Securities _____
Loans _____ Bank capital ____
d) If there is an unexpected deposit outflow of $150 million, what is the immediate effect on the balance sheet (fill in numbers in the blank)? Is there liquidity risk?
Assets Liabilities
Reserves $_____ Checkable deposits $________
Securities _____
Loans _____ Bank capital ____
Accounting Business Reporting For Decision Making
ISBN: 9780730302414
4th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver