Explanation:
The correct answer is A.
XYZ Bank has liquidity deficits in half of the months, i.e., February, March, May, and June as in the following table:
| Month | Total Deposits | Change from Previous month | Total Liabilities | Change from Previous month | Estimated Liquidity Deficit or Surplus |
|---|---|---|---|---|---|
| January | 858 | 0 | 938 | 0 | 0 |
| February | 807 | –51 | 998 | 60 | –111 |
| March | 796 | –11 | 1048 | 50 | –61 |
| April | 769 | –27 | 998 | –50 | 23 |
| May | 772 | 3 | 1008 | 10 | –7 |
| June | 776 | 4 | 1023 | 15 | –11 |
| July | 815 | 39 | 1023 | 0 | 39 |
| August | 827 | 12 | 998 | –25 | 37 |
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Q.3889 XYZ Bank has the following forecasts for its checkable deposits, time and savings deposits, commercial loans, and consumer loans over the next eight months as follows.
XYZ Bank Forecasts for Deposits and Loans Over the Next Eight Months in US$
| Month | Checkable Deposits | Time and Savings Deposits | Commercial Loans | Consumer Loans |
|---|---|---|---|---|
| January | 219 | 639 | 729 | 209 |
| February | 216 | 591 | 731 | 267 |
| March | 203 | 593 | 783 | 265 |
| April | 189 | 580 | 785 | 213 |
| May | 210 | 562 | 797 | 211 |
| June | 187 | 589 | 789 | 234 |
| July | 189 | 626 | 791 | 232 |
| August | 209 | 618 | 768 | 230 |
Using the sources and uses of funds approach, which of the following months are likely to result in a liquidity deficit?
A
February
B
April
C
July
D
August