| Question | You are a bank regulator working for the Federal Reserve. It is your job to see whether banks are solvent or insolvent, liquid or illiquid. Fit each of the following banks into one of the following four categories: 1. Liquid and solvent (best) 2. Illiquid but solvent (probably needs short-term loans from other banks or from the Fed) 3. Liquid but insolvent (should be shut down immediately: could fool people for a while if not for your good efforts) 4. Illiquid and insolvent (should be shut down immediately) a. Bank of DelMarVa Short-term assets ……………………… $10 million Short-term liabilities ………………….. $6 million Total assets……………………………… $40 million Total liabilities ………………………….. $50 million b. Bank of Escondido Short-term assets ……………………… $6 million Short-term liabilities ………………….. $10 million Total assets……………………………… $50 million Total liabilities ………………………….. $40 million c. Bank of Previa Short-term assets ……………………… $12 million Short-term liabilities ………………….. $10 million Total assets……………………………… $50 million Total liabilities ………………………….. $40 million d. Bank of Cambia Short-term assets ……………………… $6 million Short-term liabilities ………………….. $10 million Total assets……………………………… $500 million Total liabilities ………………………….. $400 million e. Bank of Marshall Short-term assets ……………………… $120 million Short-term liabilities ………………….. $100 million Total assets……………………………… $500 million Total liabilities ………………………….. $400 million |
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| Subject | business economics |
