Use the Following Balance Sheet (Values in Thousands of Dollars)

question 44

Multiple Choice

Use the following balance sheet (values in thousands of dollars) to answer the question. $$\begin{array} { | l | r | l | r | } \hline{ \text { Assets } } & & { \text { Liabilities and equity } } & \\\hline \text { Cash required reserves } & 21 & \text { Demand deposits } & 550 \\\hline \text { Short-term securities } & 369 & \text { Interbank borrowed funds } & 151 \\\hline \text { Loans } & 400 & \text { Equity } & 89 \\\hline \text { Total } & 790 & \text { Total } & 790 \\\hline\end{array}$$ If the bank experiences a $50 000 sudden liquidity drain caused by withdrawal of their demand deposits, what will be the impact on the balance sheet if purchased liquidity management techniques are used?

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

Understand the concept of trend analysis using base years in financial statements.

Learn the breakdown and components of Return on Assets (ROA).

Calculate and interpret ratios related to balance sheet items (e.g., long-term liabilities, accounts receivable).

Understand financial strategies that can improve a company's financial performance (e.g., increasing ROA).

---

Definitions:

Case Studies

Descriptive research approaches that involve in-depth examinations of single subjects, events, organizations, or situations.

Drawbacks

Negative consequences or disadvantages associated with a decision, action, or situation.

Research Domain Criteria

A research framework for understanding mental disorders in terms of behavioral dimensions and neurobiological measures.

Elements

Fundamental components or constituents of a whole, often used in the context of physical science, psychology, or abstract systems.