Final answer:
To calculate the total assets for Year 2, use the formula Trade Receivables for Year 2 - Provision for Bad and Doubtful Debts for Year 2 + Bank + Inventory.
Step-by-step explanation:
The formula to calculate the total assets for Year 2 is:
a) Trade Receivables for Year 2 - Provision for Bad and Doubtful Debts for Year 2 + Bank + Inventory
A bank's balance sheet lists money under assets which may not actually be present in the bank because these numbers also include figures for loans issued and other investments. A bank may decide to purchase loans in the secondary market and would be influenced by factors such as the borrower's payment history, changes in interest rates, and the financial health of the borrowing firm.
For example, a loan is less attractive if a borrower has been late on payments, potentially decreasing its price on the secondary market. Conversely, if interest rates rise, existing loans with lower rates may be less profitable. However, if a borrower recently declared high profits, or if interest rates fell, the loan becomes more attractive and might command a higher price.