Question
1. The following is a balance sheet of the Beta bank (in millions of dollars). Assets Cash (20) Treasury bills (40) Residential Mortgage (600) Business
1. The following is a balance sheet of the Beta bank (in millions of dollars).
Assets
Cash (20)
Treasury bills (40)
Residential Mortgage (600)
Business loans (BB+ rated) (430)
Balance (1090)
Liabilities
Deposits (1020)
Common Stock (40)
Retained earnings (30)
Balance (1090)
Note that residential mortgage is weighted with 50% risk weight.
(a) What is the leverage ratio of Beta Bank?
(b) What is the Tier 1 capital ratio?
(c) What is the total risk-weighted capital ratio?
(d) In what capitalization (capital risk) category would the bank be placed and why?
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Fundamentals Of Financial Management
Authors: Richard Bulliet, Eugene F Brigham, Brigham/ Houston
11th Edition
1111795207, 9781111795207
