$\text { Gud Bank: }$ Bad Bank Buys the Bad Loans for $232

question 20

Multiple Choice

$\text { Gud Bank: }$

$\begin{array}{l}\begin{array}{lll}\text { Cash } & & \$ 200 \\ \text { Goodloans } & & \$ 1,000 \\ \text { Bad Loans } & & \$ 380 \\ \text { Total } & & \$ 1,580 \\ &\text { Bad Bank: } & \\ \text { Cash } & & \$ 240\\\text { Loans } & & 0 \\ \\\text { Total} & & \$ 240 \\\end{array}\begin{array}{lll}\text { Deposits} &\$ 1,000 \\ \text { Puychased funds} &\$ 300 \\ \text { Equity} &\$ 280 \\ & \$ 1,580 \\\\\text { Bonds} & \$ 120\\ \text { Preferred stock} &\$ 40 \\ \text { Common stock} &\$ 80 \\ & \$ 240 \end{array}\end{array}$

Bad Bank buys the bad loans for $232.The proceeds of the loan sale are used by Good Bank to pay off purchased funds.
What will be the amount of equity on the balance sheet of Good Bank after the sale of the loans?

• A)$1,200.
• B)$232.
• C)$132.
• D)$68.

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Definitions:

Psychologically Hardy

The characteristic of being resilient in the face of stress and adversity, involving qualities like commitment, control, and challenge.

Irrational Beliefs

Misguided, unrealistic thoughts and convictions that can lead to unproductive emotions and behavior, often examined in the context of cognitive-behavioral therapy.

Catastrophizing

A cognitive distortion involving an irrational thought pattern where an individual expects or exaggerates the worst possible outcome in a situation.

Environmental Hassle

Minor irritations or stressors that occur as part of one's interaction with the environment, often cumulatively impacting well-being.