Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A U.S. based commercial bank has the following assets:$150 million in U.S. Treasury securities (0 percent risk-weight category),$450 million in Fannie Mae (FNMC) mortgage backed

A U.S. based commercial bank has the following assets:$150 million in U.S. Treasury securities (0 percent risk-weight category),$450 million in Fannie Mae (FNMC) mortgage backed securities (20 percent risk-weight category), $900 million in home mortgages (50 percent risk-weight category), and $1100 million in commercial loans (100 percent risk-weight category).This bank has $98 million in Tier 1 capital (e.g., common and preferred equity) and $46 million in Tier 2 capital (e.g., ALL, subordinated debt, etc).Based on the Basel I accord calculations, what is this commercial bank's ratio of TOTAL capital to risk-weighted assets?

A.9.11 percent

B.None of the other responses are correct

C.2.80 percent

D.8.78 percent

E.5.98 percent

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Corporate Finance

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

13th Edition

1265553602, 978-1265553609

More Books

Students also viewed these Finance questions

Question

=+c) What are the RRRs? Based on the RRRs, what action is best?

Answered: 1 week ago