Bank Assets Cash Repurchase agreements Muncipal bonds Single Family Home Mortgages CMOS Commercial loans Agricultural loans Allowance for loan loss Bank buildings Total I. II. III. $200000 $100,000 $200,000 $270,000 a. From the table above calculate $150,000 $250,000 $310,000 ($3,000) $200,000 I. II. III. Risk Weights 6 0% 20% 20% 50% 50% 100% 100% 0% 100% Risk adjusted Assets The minimum Tier 1 capital for this bank The minimum total capital for this bank Risk Adjusted Assets (9 marks) (5 marks) (5 Marks) b. A bank has decided that it must raise external equity. Explain the advantages and dis advantages of each of the following choices (6 marks) Subordinated debt at 7.7% Preferred stock at 10% dividend yield Common Stock

a. From the table above calculate 1. Risk adjusted Assets (9 marks) II. The minimum Tier 1 capital for this bank (5 marks) III. The minimum total capital for this bank ( 5 Marks) b. A bank has decided that it must raise external equity. Explain the advantages and dis advantages of each of the following choices ( 6 marks) 1. Subordinated debt at 7.7% II. Preferred stock at 10% dividend yield III. Common Stock a. From the table above calculate 1. Risk adjusted Assets (9 marks) II. The minimum Tier 1 capital for this bank (5 marks) III. The minimum total capital for this bank ( 5 Marks) b. A bank has decided that it must raise external equity. Explain the advantages and dis advantages of each of the following choices ( 6 marks) 1. Subordinated debt at 7.7% II. Preferred stock at 10% dividend yield III. Common Stock