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  3. 1. a bank in singapore has the following balance s

1. A bank in Singapore has the following balance sheet (in million): Assets Cash S$10...

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Finance

1. A bank in Singapore has the following balance sheet (in million):

Assets

Cash S$10 ,Mortgage Loans S$110, Securities S$30, Total assets S$150

Liabilities and Equity

Deposits S$100, Purchased funds S$35, Equity S$15, Total liabilities and equity S$150

This bank has S$6 million in excess cash reserves, and S$25 million line of credit to borrow in money market. Banks securities portfolio consists of S$10 million of short- term government bonds with lower price risk, and S$20 million of long-term corporate bonds with higher price risk. The bank currently has borrowed S$10 million in the money market.

Required:

a. Compute the net liquidity of the bank?

b. Assume unexpected deposit withdrawal of S$10million.Show the impact onthe bank balance sheet if the following liquidity solution is used.

i. Stored liquidity.

ii. Purchased liquidity.

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