As a Result of Loan Write-Offs,Bank a Has to Be

question 96

Multiple Choice

As a result of loan write-offs,Bank A has to be liquidated by the regulators.The book value of the assets and liabilities of the bank is presented below (in millions of dollars) .The market value of the loans has been estimated at $240 million.
$\begin{array}{lll} \text { Loans(book value) } & \text {340 Insured Deposits }& \$200\\& \text { Urinsured Deposits} & \$100\\& \text { Equity} & \$ 40\\\end{array}$

What is the cost to the FDIC if the insured depositor transfer resolution method is used by the regulators to resolve the bank failure?

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Definitions:

Average Inventory

The mean value of a company's inventory over a specified period, often used to calculate turnover rates and efficiency in managing stock levels.

Gross Profit Method

A method of estimating inventory cost that is based on the relationship of gross profit to sales.

Merchandise Destroyed

Refers to goods or stock that have been ruined or damaged beyond sellable condition, often resulting in a loss for the business.

Retail Inventory Method

An accounting method used by retailers to estimate inventory value by converting retail prices to cost values.