Modify the Diamond-Dybvig model in the following way: Suppose that there are two assets, an illiquid asset that returns (1 + R) units of consumption goods in period 2 for each unit invested in period 0 and a liquid asset that returns one unit of consumption goods in period 1 (nothing in period 2) for each unit invested in period 0. The illiquid asset cannot be liquidated in period 1. Required:
a. Determine a consumers lifetime budget constraint when there is no bank, show this in a diagram, and determine the consumer's optimal consumption when an early consumer and when a late consumer in the diagram.
b. Determine a bank's lifetime budget constraint, show this in your diagram, and determine the optimal deposit contract for the bank in the diagram Are consumers who deposit in the bank better off than in part (a)? Explain why or why not?
c. Is there a bank run equilibrium? Explain why or why not?

You are the manager in charge of global operations at bankglobal – a large commercial bank that operates in a number of countries around the world. you must decide whether or not to launch a new advertising campaign in the u. s. market. your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on u. s. operations. in addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the u. s. advertising campaign were launched. your goal is to maximize bankglobal’s value. should you launch the new campaign? explain. pre-advertising campaign post-advertising campaign total revenues $18,610,900 $31,980,200 variable cost tv airtime 5,750,350 8,610,400 ad development labor 1,960,580 3,102,450 total variable costs 7,710,930 11,712,850 direct fixed cost depreciation – computer equipment 1,500,000 1,500,000 total direct fixed cost 1,500,000 1,500,000 indirect fixed cost managerial salaries 8,458,100 8,458,100 office supplies 2,003,500 2,003,500 total indirect fixed cost $10,461,600 $10,461,600

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Stosch company's balance sheet reported assets of $112,000, liabilities of $29,000 and common stock of $26,000 as of december 31, year 1. if retained earnings on the balance sheet as of december 31, year 2, amount to $74,000 and stosch paid a $28,000 dividend during year 2, then the amount of net income for year 2 was which of the following? a)$23,000 b) $35,000 c) $12,000 d)$42,000