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6) The following table shows the balance sheet for ABC Credit Union. Use the information to answer the following questions. Assets Reserves =$50m Interbank loans

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6) The following table shows the balance sheet for ABC Credit Union. Use the information to answer the following questions. Assets Reserves =$50m Interbank loans =$45m T-bills =$150m Corporate bonds =$25m Commercial loans =$200m Liabilities Checkable deposits =$425m Bank capital = ? a) What is ABC Credit Union's simple capital ratio? b) If reserves and t-bills have a 0% risk weighting, interbank loans have a 20% risk weighting, corporate bonds have a 50% risk weighting, and commercial loans have a 100% risk weighting, what is ABC Credit Union's risk-weighted capital ratio? c) Suppose that as a result of rising loan defaults, ABC credit union experiences $20 million of losses on their commercial loans. Use a t-account to show the effect of the loan losses and then draw the bank's new balance sheet. d) Suppose the minimum capital requirement is 15% of risk-weighted assets. After the losses in part c, is the bank in compliance with capital regulations? What are the three actions ABC Credit Union could take to bring the bank's risk-weighted capital ratio to the minimum level? Be specific in regard to magnitudes

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