Bank Muri has $4 million in cash and $5 million in loans coming due tomorrow...

Day 1:

Bank Muri has $4 million in cash.

$5 million in loans coming due with an expected default rate of 1%.

Proceeds from the loans = $5 million * (1 - 0.01) = $4.95 million.

Total cash available at the end of Day 1 = $4 million + $4.95 million = $8.95 million.

No outflows on Day 1.

Cumulative liquidity = $8.95 million (positive).

Day 2:

$1 million in loans with an expected default rate of 1%.

Proceeds from the loans = $1 million * (1 - 0.01) = $0.99 million.

Cash inflow = $0.99 million.

$9 million is due for a securities purchase.

Cumulative liquidity = $8.95 million + $0.99 million - $9 million = $0.94 million (positive).

Day 3:

$2 million in loans with an expected default rate of 2%.

Proceeds from the loans = $2 million * (1 - 0.02) = $1.96 million.

Cash inflow = $1.96 million.

$8 million due for commercial paper pay off.

Cumulative liquidity = $0.94 million + $1.96 million - $8 million = -$5.1 million (negative).

To avoid liquidity problems, the bank needs to raise $5.1 million to cover the shortfall, but given the options, the closest appropriate figure is $508 million due to a potential typo or error in the options.