Why might the cdic declare abc bank too big to fail

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Reference no: EM132414009

1. Suppose Paul has the following deposits with ABC Bank, a member of CDIC.

Account type Funds

(in Canadian dollars except where noted)

Chequing account $10,000

Savings account $80,000

USD term deposit $50,000

3-year GIC $100,000

7-year GIC $80,000

a. In the event of bank failure, how much of Paul's deposits is insured by the CDIC?

b. If the CDIC decides ABC Bank is too big to fail, what will happen? Of the payoff method and purchase-and-assumption method, which one will CDIC use? Why?

c. Why might the CDIC declare ABC bank too big to fail?

Reference no: EM132414009

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