An investment bank specializing in fixed-income assets has the following balance sheet (in millions). Amounts are in
Question:
An investment bank specializing in fixed-income assets has the following balance sheet (in millions). Amounts are in market values and all interest rates are annual unless indicated otherwise.
a. Does the investment bank have sufficient liquid assets per the net capital rule? Is the investment bank in compliance with SEC Rule 15C 3–1?
b. Assume that rates on all assets rise 15 basis points and on all liabilities rise 25 basis points (per year). Will the FI be in compliance with SEC Rule 15C 3–1?
c. How does the net capital rule for investment banks differ from the capital requirements imposed on depository institutions?
Step by Step Answer:
Financial Institutions Management A Risk Management Approach
ISBN: 9781266138225
11th International Edition
Authors: Anthony Saunders, Marcia Millon Cornett, Otgo Erhemjamts