Question
A Bank has the following balance sheet (in millions), with the risk weights in parentheses. Assets Liabilities and Equity Cash (0%) $ 19 Deposits $
A Bank has the following balance sheet (in millions), with the risk weights in parentheses.
| Assets | Liabilities and Equity | ||||||||||
| Cash (0%) | $ | 19 | Deposits | $ | 171 | ||||||
| Mortgage loans (50%) | $ | 65 | Subordinate debt (>5 years) | $ | 8 | ||||||
| Consumer loans (100%) | $ | 115 | Equity | $ | 16 | ||||||
| Reserve for loan losses | ($ | 4 | ) | ||||||||
| Total Assets | $ | 195 | Total Liability and Equity | $ | 195 | ||||||
In addition, the bank has $30 million in commercial direct-credit substitute standby letters of credit to a public corporation and $30 million in 10-year FX forward contracts that are in the money by $2 million.
- What are the risk-adjusted on-balance-sheet assets of the bank as defined under the Basel III?
- What are the common equity Tier I (CET1) risk-based capital ratio, Tier I risk-based capital ratio, and the total riskbased capital ratio?
- Disregarding the capital conservation buffer, does the bank have sufficient capital to meet the Basel requirements?
HELP with all the questions specially 1 & 3 please.
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Small Business Finance And Valuation
Authors: Rick Nason, Dan Nordqvist
1st Edition
1952538122, 9781952538124
