1. By how much has the Tier 1 equity capital (including the capital conservation buffer) increased under Basel III compared with the Tier 1 equity capital requirement under Basel I and II?

2. Suppose that the Tier 1 equity ratio for a bank is 6%. What is the maximum dividend, as a percent of earnings, that can be paid if (a) there is no countercyclical buffer and (b) there is a 2.5% countercyclical buffer?

3. Explain how CoCo bonds work. Why are they attractive to (a) banks and (b) regulators?

4. A bank has the following balance sheet:

Cash	3	Retail Deposits (stable)	25
Treasury Bonds (> 1 yr)	5	Retail Deposits (less stable)	15
Corporate Bonds Rated A	4	Wholesale Deposits	44
Mortgages	18	Preferred Stock (> 1 yr)	4
Small Business Loans	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?