assume that you are a member of the asset-liability management (ALM) committee of DDR Bank. Recently, you have collected following information, based on which you are requested to write a short report (including all formulas and detailed calculation steps) to the committee comparing the probability of book value insolvency of DDR Bank with a peer bank KLJ. Your associate, Jack Hardin, supplied the following historical return on asset schedule, which might be useful to measure expected return

on asset.

Historical return on asset schedule DDR Bank 0.25 Year 2019 KLJ Bank 0.22 -0.02 -0.10 2020 2021 0.15 -0.05 15 18 Total equity (in millions) Total liabilities (in millions) 105 90