A.

Calculate the banks' reserve ratio.

B.

If the required reserve is 10%, what is the maximum deposit outflow that each bank

can handle before it has to change its asset holdings?

C.

If the capital requirement is 8% of risk-adjusted assets, what is the minimum capital

that each bank needs to maintain the current balance sheet?

D.

If both banks suffer a loss of $3 m in the portfolio of commercial loans, which bank

will be undercapitalized? And, by how much?

E.

What can the bank do to meet the capital requirement? (No calculation needed)

1. PROJECT MANAGEMENT. A new software installation project consists of Marks the following project activities. The tasks, durations (weeks), costs, and 11 predecessors relationships for the project are shown in the table below. Normal Crash Immediate Time Time Normal Crash Activity Predecessor (weeks) (weeks) Cost($) Cost($) A 4 3 3 000 3 350 B A 12 10 5 500 6 100 C B 19 16 5 900 7 700 D B 8 5 4 800 5 820 E D 4 4 3 800 3 800 F E 2 1 3 500 3 500 G F 4 4 6 000 6 000 H B 20 18 9 000 11 500 I C, H 4 4 6 000 6 000 J G, I O D D 0 e. Draw the Activity-on-Node and the Critical Path Method network diagrams for this project, and identify the expected project completion time. [4 Marks] What is the project network's Critical path? [1 Mark] Find the lowest-cost option for completing ('crashing') the project two weeks early. Show your calculations in detail. [2 Marks] Prove that your lowestcost option to "crash" the project by two weeks is actually a valid solution, and identify how the 'original' critical path has been affected. Show your calculations in detail. [3 Marks] Calculate the new total project cost after the 'z-week' crash. [1 Mark]