Based on the balance sheet below, answer the following questions.

Capital Requirements for Melvins Bank
	Assets	Weights	Weighted Assets
Reserves	20	0.0
Securities
Treasury Bonds	45	0.0
Municipal Bonds	10	0.5
Loans
Interbank	25	0.2
Home Mortgages	20	0.5
C & I	80	1.0
Total	200

a) Based on the balance statement above, calculate the level of capital that Melvin's must hold to satisfy the minimum equity ratio (5%)

b) Based on the balance statement above, calculate the level of capital that Melvin's must hold to satisfy the risk based Basel requirement (8%)

c) which of the two requirement is more stringent in this case? If so, why?

Based on the balance sheet and income statement above, calculate the ROA, ROE and rate sensitivity gap for each question below. Show your work.

a) For the statement above, calculate the following:

ROA

ROE

Rate Sensitivity

b) THe bank now issues $20 of new stock and uses the proceeds to make loans. For this question, begin with the original numbers when calculating your answers

ROA

ROE

Rate sensitivity