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1. Based on the following information, construct a traditional financial institution balance sheet AND a balance...

1. Based on the following information, construct a traditional financial institution balance sheet AND a balance sheet including off-balance sheet items.

Market value of assets = 200 Market value of contingent assets = 100

Market value of liabilities = 180 Market value of contingent liabilities = 110
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Answer #1

Traditional Financial Institution Balance Sheet: Net Worth (E)

= Market Value of Assets - Market Value of Liabilities

Traditional Financial Institution Balance Sheet with On and Off Balance Sheet Activities:

Net Worth (E) = (Market Value of Assets - Market Value of Liabilities) + ( Contingent Assets - Contingent Liabilities)

Traditional Financial Institution Balance Sheet Market value of assets Traditional Financial Institution Balance Sheet with On and Off Balance Sheet Activities 200 200 Market value of assets Market value of Contingent Assets Total Assets 200 100 300 Market value of Liabilities 180 180 Net Worth 20 Market value of contingent liabilities Total Liabilities Net Worth (E) Market value of Liabilities180 110 290 10

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