Question
In: Finance
An FI has the following Balance Sheet (in millions of dollars): Assets&nbs
An FI has the following Balance Sheet (in millions of dollars):
Assets Liabilities and Equity
Cash $40 Deposits $135
Loans $100 Equity $15
Securities $10
The FI is expecting a $50 million net deposit drain. Show the FI's new balance sheet if:
- The Stored Liquidity method is used to meet the liquidity shortfall
- The FI purchases liabilities to offset this expected drain.
Solutions
Expert Solution
a. The Stored Liquidity method is used to meet the liquidity shortfall.
The $ 50 million drain reflects on the deposits and cash and securities are used to meet this. (Cash $ 40 mln and securities $ 10 mln)
FI's new balance sheet:
Assets Liabilities and Equity
Loans $100 Equity $15
Deposits $ 85
Total Assets $100 Total liabilities and equity $ 100
b. The FI purchases liabilities to offset this expected drain.
The $ 50 million drain reflects on the deposits and liabilities are purchased.
Assets Liabilities and Equity
Cash $40 Deposits $ 85
Loans $100 Equity $15
Securities $10 Purchased liabilities $ 50
Total Assets $150 Total liabilities and equity $ 150
jeff jeffy answered 1 year agoRelated Solutions
A company’s Balance Sheet (in millions) Assets &nbs
A company’s Balance Sheet (in millions)
Assets Liabilities
& Equity
Current $ 80
Net
Fixed $120 Bonds
($1000
Par) 130
Preferred
stocks ($100 Par) 40
Total $200 Common
Stock ($1
par) 30
Total $200
The company's bonds have 10 years to mature, pay 10% coupon rate
semi-annually and comparable bonds' YTM is 14%.
The company’s applicable tax rate is 40%.
The market price of common stock is $10.50 per share.
The common stock is constantly growing at a rate of 6%. The same
growth rate is expected to continue for...
Consider the following balance sheet (in millions) for an FI: Assets Liabilities Duration = 13 years...
Consider the following balance sheet (in millions) for an
FI:
Assets
Liabilities
Duration = 13 years
$
970
Duration = 5 years
$
900
Equity
70
a. What is the FI’s duration gap? (Do not
round intermediate calculations. Round your answer to 2 decimal
places. (e.g., 32.16))
b. What is the FI’s interest rate risk
exposure?
c. How can the FI use futures and forward
contracts to create a macrohedge?
d. What is the impact on the FI’s equity value...
Consider the following balance sheet (in millions) for an FI: Assets Liabilities Duration = 10 years...
Consider the following balance sheet (in millions) for an
FI:
Assets Liabilities
Duration = 10 years $950 Duration = 2 years $860
Equity 90
a)What is the FI's duration gap?
b)What is the FI's interest rate risk exposure?
c)How can the FI use futures and forward contracts to put on a
macrohedge?
d) What is the impact on the FI's equity value if the relative
change in interest rates is an increase of 1 percent? That is,
DR/(1+R) =...
Apex Roofing Inc. has the following balance sheet (in millions of dollars): Current assets $3.0 Accounts...
Apex Roofing Inc. has the following balance sheet (in millions
of dollars): Current assets $3.0 Accounts payable $1.2 Net fixed
assets 4.0 Notes payable 0.8 Accrued wages and taxes 0.3 Total
current liabilities $2.3 Long-term debt 1.2 Common equity 1.5
Retained earnings 2.0 Total assets $7.0 Total liabilities and
equity $7.0 Last year's sales were $10 million, and Apex estimates
it will need to raise $2 million in new debt and equity next year.
You have identified the following facts:...
Rowan Company Comparative Balance Sheet (dollars in millions) Ending Balance Beginning Balance Assets Current assets: ?Cash...
Rowan Company
Comparative Balance Sheet
(dollars in millions)
Ending
Balance
Beginning
Balance
Assets
Current assets:
?Cash and cash equivalents
$70
$91
?Accounts receivable
536
572
?Inventory
??620
??580
Total current assets
?1,226
?1,243
Property, plant, and equipment
1,719
1,656
?Less accumulated depreciation
??640
??480
Net property, plant, and
equipment
?1,079
?1,176
Total assets
$2,305
$2,419
Liabilities and
Stockholders’ Equity
Current liabilities:
?Accounts payable
$205
$180
?Accrued liabilities
94
105
?Income taxes payable
???72
???88
Total current liabilities
371
373
Bonds...
3. Megalopolis Bank has the following balance sheet and income statement. Balance Sheet (in millions) Assets...
3. Megalopolis Bank has the following balance sheet and income
statement.
Balance Sheet (in millions)
Assets | Liabilities and Equity
Cash and due from banks $ 9,000 | Demand deposits $ 19,000
Investment securities 23,000 | NOW accounts 89,000
Repurchase agreements 42,000 | Retail CDs 28,000
Loans 90,000 | Debentures 19,000
Fixed assets 15,000 | Total liabilities $155,000
Other assets 4,000 | Common stock 12,000
Total assets $183,000 | Paid-in capital 4,000
| Retained earnings 12,000
| Total liabilities and...
Megalopolis Bank has the following balance sheet and income statement. Balance Sheet (in millions) Assets Liabilities...
Megalopolis Bank has the following balance sheet and income
statement.
Balance Sheet (in millions)
Assets
Liabilities and Equity
Cash and due from banks
$
9,400
Demand deposits
$
23,000
Investment securities
27,000
NOW accounts
93,000
Repurchase agreements
46,000
Retail CDs
32,000
Loans
94,000
Debentures
23,000
Fixed assets
19,000
Total liabilities
$
171,000
Other assets
4,400
Common stock
12,000
Paid-in capital
4,000
Retained earnings
12,800
Total assets
$
199,800
Total liabilities and equity
$
199,800
Income Statement
Interest on fees and...
Contingent Bank has the following balance sheet in market value terms (in millions of dollars).
Contingent Bank has the following balance sheet in market
value terms (in millions of dollars).Assets LiabilitiesCash $20 Deposits $220Mortgages 220 Equity 20Total assets $240 Total liabilities and equity $240In addition, the bank has contingent assets with $100 million
market value and contingent liabilities with $80 million market
value. What is the true stockholder net worth? What does the term
contingent mean?
A Bank has the following balance sheet (in millions), with the risk weights in parentheses. Assets...
A Bank has the following balance sheet (in millions), with the
risk weights in parentheses.
Assets
Liabilities and Equity
Cash (0%)
$
19
Deposits
$
171
Mortgage loans (50%)
$
65
Subordinate debt (>5 years)
$
8
Consumer loans (100%)
$
115
Equity
$
16
Reserve for loan losses
($
4
)
Total Assets
$
195
Total Liability and Equity
$
195
In addition, the bank has $30 million in commercial
direct-credit substitute standby letters of credit to a public...
CONSOLIDATED BALANCE SHEET (millions of dollars) 2016 2015 Assets 2016 2015 Current assets 2016 2015 Cash...
CONSOLIDATED BALANCE SHEET
(millions of dollars)
2016
2015
Assets
2016
2015
Current assets
2016
2015
Cash and cash equivalents
3,657
3,705
Notes and accounts receivable
21,394
19,875
Inventories: Crude oil, products and merchandise
10,877
12,037
Materials and supplies
4,203
4,208
Other current assets
1,285
2,798
Total current assets
41,416
42,623
Crude oil, products and merchandise inventories are carried at
the lower of current market value or cost (generally determined
under the last-in, first-out method – LIFO). Inventory costs
include...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Topic: Choose a company which are you are starting, and a main product or service that...
- 4. Why did the United States and the Soviet Union find themselves in a “Cold War”...
- The Facts: Ann and Bill decided to start a coffee shop. They agreed Bill would provide...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- A firm's bonds have a maturity of 8 years with a $1,000 face value, have an...
- Naive reasoning suggests that a string theory vacuum with cosmological constant Lambda1 is always unstable as...
- I. Design and code a class Rectangle that has the following properties: Two private members double...
ADVERTISEMENT