Chapter 13:

1. Rosemary Bank of New York expects new deposit inflows next month of $375 million and deposit withdrawals of $500 million. The bank’s economics department has projected that new loan demand will reach $460 million and customers with approved credit lines will need $175 million in cash. The bank will sell $480 million in securities, but plans to add $85 million in new securities to its portfolio. What is the projected available funds gap?

Chapter 14:

2. What risks do investment products pose for the institutions that sell them? How might these risks be minimized?

Chapter 15:

3. What is the rationale for having the government set capital standards for financial institutions as opposed to letting the private marketplace set those standards?

Chapter 16:

4. Crockett Manufacturing and Service Company holds a sizeable inventory of dryers and washing machines, which it hopes to sell retail dealers over the next six months. These appliances have a total estimated market value currently of $25 million. The firm also reports accounts receivable currently amounting to $12,650,000. Under the guidelines for taking collateral discussed the reading assignments, what is the minimum size loan or credit line Crockett is likely to receive from its principal lender? What is the maximum size loan or credit line Crockett is likely to receive? Show all computations.