4. What is meant by Liquidity and its discuss its significance?

4-- Suppose a bank's balance sheet looks like this. The bank is required to hold reserves equal to 10% of deposits. Assets Reserves Loans Total Assets $ 800 $ Liabilities 5200 $ 6000 $ Deposits 6000 Total Liabilities LA 6000 a. How much excess reserves does the bank hold? b. How much more can this bank lend?

17)What is a "subprime mortgage," and would a subprime borrower be likely to pay a higher or a lower interest rate than a borrower with a better credit history? Select one: a. Loans granted to borrowers with flawed credit histories; a higher interest rate. b. Loans granted to borrowers with the best credit histories; a lower interest rate. c. Loans granted to borrowers with flawed credit histories; a lower interest rate. d. Loans granted to borrowers with the best credit histories; a higher interest rate.

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