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A bank has $20 million in assets, with risk-adjusted assets of $10 million. Tier I capital is $600,000 (including CET1 and additional Tier 1) and
A bank has $20 million in assets, with risk-adjusted assets of $10 million. Tier I capital is $600,000 (including CET1 and additional Tier 1) and Tier II capital is $400,000. a. What is the current values of the Tier I ratio and the total ratio? Does the bank meet the Basel III capital requirements? b. If the bank repurchases $90,000 of common stock with cash, what will the new value of each ratio be? C. If the bank issues $800,000 in common stock and lends it to help finance a new shopping mall (commercial loan). What will the new value of each ratio be
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