3. You are a bank regulator working for the Federal Reserve. It is your job to s
ID: 1098529 • Letter: 3
Question
3. 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 bank below into
one of the following four categories:
Liquid and solvent (best)
Illiquid but solvent (probably needs short-term loans from other banks or from the Fed)
Liquid but insolvent (should be shut down immediately: could fool people for a while if not for
your good efforts)
Illiquid and insolvent (should be shut down immediately)
Bank
Short-term Assets
Short-term Liabilities
Total Assets
Total Liabilities
Category?
Bank of DelMarVa
$10 million
$6 million
$40 million
$50 million
Bank of Escondido
$6 million
$10 million
$50 million
$40 million
Bank of Previa
$12 million
$10 million
$50 million
$40 million
Bank of Cambia
$8 million
$10 million
$30 million
$40 million
Bank of Marshall
$120 million
$100 million
$500 million
$400 million
Bank
Short-term Assets
Short-term Liabilities
Total Assets
Total Liabilities
Category?
Bank of DelMarVa
$10 million
$6 million
$40 million
$50 million
Bank of Escondido
$6 million
$10 million
$50 million
$40 million
Bank of Previa
$12 million
$10 million
$50 million
$40 million
Bank of Cambia
$8 million
$10 million
$30 million
$40 million
Bank of Marshall
$120 million
$100 million
$500 million
$400 million
Explanation / Answer
liquid but solvent (probably needs short-term loans from other banks or from the Fed)
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