All Star Bank has the following balance sheet (in millions):
Assets
Liabilities and Equity
Cash
$30
Deposits
$110
Loans
90
Borrowed funds
40
Securities
$50
Equity
$20
Total assets
$170
Total liabilities and equity
All Star Bank’s largest customer decides to exercise a $15 million loan commitment. How will the new balance sheet appear if All Star uses the following liquidity risk strategies?
a. Stored liquidity management.
b. Purchased liquidity management.
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