Unicorn Bank has the following balance sheet:

Using purchased liquidity management techniques, how can the bank address an expected net deposit drain of $20,000?

Question

Unicorn Bank has the following balance sheet: 
  
   
  Using purchased liquidity management techniques, how can the bank address an expected net deposit drain of $20,000?

Answer

Run down the $20,000 cash.

Answer

Issue $20,000 in new equity.

Answer

Borrow $20,000 in the interbank funds market.

Answer

Sell short-term securities in order to raise $20,000 cash.

Answer

Liquidate $20,000 worth of loans.

Assets	Liabilities and Equity
Cash	21,000	Demand Deposits	550,000
Short-term Securities	369,000	Interbank Funds Borrowed	151,000
Loans	400,000	Equity	89,000
Total	790,000	Total	790,000

Crowdly

Unicorn Bank has the following balance sheet: Using purchased liquidit...

Want instant access to all verified answers on moodle.telt.unsw.edu.au?