If the Bank Experiences a $50,000 Sudden Liquidity Drain Caused

question 19

Multiple Choice

If the bank experiences a $50,000 sudden liquidity drain caused by a loan commitment draw down,what will be the impact on the balance sheet if stored liquidity management techniques are used?

• A)A reduction in cash of $21,000 and an increase in demand deposits of $29,000.
• B)A reduction in securities and/or current loans totaling $50,000.
• C)A reduction in cash of $21,000 and a decrease in securities holdings of $29,000.
• D)A decrease in equity of $50,000.

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