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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...

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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

$170

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.

Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021
111 Votes
1.All Star Bank has the following balance sheet (in millions):
Assets Liabilities and Equity
Cash $30 Deposits $110
Loans 90 Bo
owed funds 40
Securities 50 Equity 20
Total Assets $170 Total Liabilities & Equity $170
All Star Bank’s largest customer decides to exercise a $15...
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