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Consider the following balance sheet for XYZ Community Bank: (10 pts) Assets $ million Duration Risk Weight Liabilities $ million Duration Reserve 4 0 0
- Consider the following balance sheet for XYZ Community Bank: (10 pts)
| Assets | $ million | Duration | Risk Weight | Liabilities | $ million | Duration |
| Reserve | 4 | 0 | 0 | Deposits | 40 | 0 |
| T-Bonds | 10 | 5 | 0 | Money mkt | 20 | 0.2 |
| Agency | 6 | 3 | 0.2 | CD | 18 | 0.8 |
| Mortgage | 10 | 4 | 0.5 | Borrowings | 15 | 2.5 |
| Commercial | 30 | 2 | 1 | Loan Loss Reserve | 2 | 0 |
| Consumer | 40 | 2.5 | 1 | Capital | 5 | 0 |
| TA | 100 | TL | 100 |
- Interest rate was 6%. However, the rate has just increased by 1%. What would happen to net worth (capital)?
- Required reserve for deposits is 10%. The bank experiences a deposit withdrawal for $1 million. Calculate the current reserve and required reserve after the withdrawal. Does the bank have enough reserve to meet the required reserve?
- Calculate the risk-weighted assets and risk-weighted capital ratio.
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Fundamentals Of Financial Management
Authors: Richard Bulliet, Eugene F Brigham, Brigham/ Houston
11th Edition
9781111795207
