One of Normanby Bank’s wholesale customers decides to make an immediate deposit withdrawal of $15 million. To fund this withdrawal request, the bank adopts a liability liquidity management approach via the interbank funds market. Which of the following statements is CORRECT?
Normanby Bank has the following balance sheet.
|
Assets ($ million) |
Liabilities and equity ($ million) |
||
|
Treasury notes |
85 |
Deposits |
125 |
|
Loans |
115 |
Interbank funds |
55 |
|
|
|
Equity |
20 |
|
Total assets |
200 |
Total liabilities and equity |
200 |
One of Normanby Bank’s wholesale customers decides to make an immediate deposit withdrawal of $15 million. To fund this withdrawal request, the bank adopts a liability liquidity management approach via the interbank funds market. Which of the following statements is CORRECT?
After the transactions, the bank has 140m in deposits, 40m in interbank funds, and total assets remain unchanged.
After the transactions, the bank has 110m in deposits, 40m in interbank funds, and 170m in total assets.
After the transactions, the bank has 125m in deposits, 70m in interbank funds, and 215m in total assets.
After the transactions, the bank has 110m in deposits, 70m in interbank funds, and total assets remain unchanged
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