A bank has the following balance sheet Cash 3 Retail Deposits (stable) 25 Treasury Bonds (>1 year)
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A bank has the following balance sheet
Cash | 3 | Retail Deposits (stable) | 25 | |
Treasury Bonds (>1 year) | 5 | Retail Deposits (less stable) | 15 | |
Corporate Bonds Rated A | 4 | Wholesale Deposits | 44 | |
Residential Mortgages | 18 | Preferred Stock (> 1 yr) | 4 | |
Small Business Loans (<1 yr) | 60 | Tier 2 Capital | 3 | |
Fixed Assets | 10 | Tier 1 Capital | 9 | |
100 | 100 |
(a) What is the Net Stable Funding Ratio?
(b) The bank decides to satisfy Basel III by raising more retail deposits and Keeping the proceeds in Treasury bonds. What extra retail deposits need to be raised?
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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