A DI has the following balance sheet (in millions). Assets: Cash=9$ ; Loans=95 ; Securities= 26; total assets=130 Liabilities and equity: deposits= 75; purchased funds= 40; equity=15 ; total liabilites and equity= 130 The DI’s securities portfolio includes $16 million in T-bills and $10 million in GNMA securities. The DI has a $20 million line of credit to borrow in the repo market and $5 million in excess cash reserves (above reserve requirements) with the Fed. The DI currently has borrowed $22 million in Fed funds and $18 million from the Fed discount window to meet seasonal demands. 1) What is the DI’s total available (sources of) liquidity? 2) What is the DI’s current total uses of liquidity? 3) What is the net liquidity of the DI? 4) Calculate the financing gap. 5) What is the financing requirement? 6) The DI expects a net deposit drain of $20 million. Show the DI's balance sheet if the following conditions occur: a. The DI purchases liabilities to offset this expected drain. b. The stored liquidity management method is used to meet the expected drain (the DI does not want the cash balance to fall below $5 million, and securities can be sold at their fair value). I want the full answer
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
A DI has the following balance sheet (in millions). Assets: Cash=9$ ; Loans=95 ; Securities= 26; total assets=130 Liabilities and equity: deposits= 75; purchased funds= 40; equity=15 ; total liabilites and equity= 130 The DI’s securities portfolio includes $16 million in T-bills and $10 million in GNMA securities. The DI has a $20 million line of credit to borrow in the repo market and $5 million in
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