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defon
2 years ago
10

Suppose that as a result of a housing price​ decline, the value of the​ bank's securitized assets falls by an uncertain​ amount,

so that these assets are now worth somewhere between 25 and 45. Call the securitized assets​ "troubled assets." The value of the other assets remains at 50. As a result of the uncertainty about the value of the​ bank's assets, lenders are reluctant to provide any​ short-term credit to the bank.
Business
1 answer:
neonofarm [45]2 years ago
4 0

Answer:

<em>Recapitalization will be a better policy than buying the troubles assets because, buying troubled assets will at most case provide a bank liquidity  but not necessarily a positive capital.</em>

Explanation:

<em>From the question, we recall the following,</em>

<em>The firm has three assets which are 50 of untroubled assets, 25 of troubled assets and 25 of treasury bonds</em>

The Securitized assets will be now 50-25= 25

The value other assets will remain at= 50

The Treasury bonds will be 50-25=25

The Short term credit will remain at= 80

The Capital will be =20  

Securitized assets. 25. Short term credit 80

Other assets.=50 and capital= 20

The Treasury bonds=25

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1 year ago
A mutual fund has $2 million in cash and $6 million invested in securities. It currently has 1 million shares outstanding.
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Answer:

a. NAV = 8 per share

b. 250.000 shares

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3 years ago
Conversations with people who start their own business often reveal that Group of answer choices most small business owners begi
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7 0
3 years ago
Indicate whether each of the following transactions represents an increase in net exports, a decrease in net exports, an increas
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Exports are described as the selling of domestic goods to a foreign country while Imports are characterized as the process of bringing in foreign goods to the domestic country. And Capital outflow is defined as the exact flow of funds from domestic to foreign and foreign to the domestic country.

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3 years ago
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Answer:

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2A + 3B  ≤ 4800

6 0
3 years ago
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