1. Assume there is a loan loss of $2. What is the old and new capital ratio?

reserves	10	deposits	85
loans	90	capital	15

A. 17.65%, 13.27% B. 15.00%, 13.00% C. 17.65%, 15.29% D. 15.00%, 13.27%

2. Suppose the bank in Table 10 loses $10 in loans. Calculate the new risk weighted capital ratio. Use weights of 0.94 for risky assets and zero for risk free assets.

Asset		Liabilities
reserves	10	deposits	40
real estate loans	30	borrowing	70
treasury sercurities	20
commerical loans	65

A. 4.00% B. 4.95% C. 6.26% D. 5.26%