EMBATTERM4 Assignmen Home Insert Page Layout FormulasData Review View s Cut a Co
ID: 1172183 • Letter: E
Question
EMBATTERM4 Assignmen Home Insert Page Layout FormulasData Review View s Cut a Copy 7 Format Painter General Font C24 Question 3-8a and b A DI has the following balance sheet (in millions) 1 2 Assets Cash Loans Securities Total assets S9 95 Deposits Purchased funds Equity Total liabilities and equity $75 40 $130 $130 10 The DI's securities portfolio includes S16 million in T-bills and $10 million in GNMA securities The DI has a $20 million line of credit to borrow in the repo market and S5 million in excess cash reserves (above reserve requirements) with the Fed. The DI currently has borrowed $22 13 4 million in Fed funds and $18 million from the Fed discount window to meet seasonal demands. 15 3. What is the Dr's total available (sources of) liquidity? 16 4. What is the DI's current total uses of Liquidity? 17 5 What is the net liquidity of the DI? 18 6. Calculate the financing gap 19 7. What is the financing requirement? 21 24 27 30 31 35Explanation / Answer
Answer A)
Source of liquidity = T-bill + Line of credit + excess cash reserve = 16 +20+5 = $ 41 million
Answer B)
Used liquidity = Borrow from Fed Fund + Borrow from Fed discount window
= 22 + 18 = $ 40 million
Answer 3)
Net Liquidity = Source of liquidity - used liquidity = 41-40 = $1 million
Answer 4)
Financing gap = loans – deposits = 95-75 = $ 20 millions
Answer 5)
Financing requirement = financing gap + liquid assets = 20+ 9 = $ 29 millions
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