Lets change the example of capital requirements in Table 10.3 (chapter 10). Assume that Melvins Bank holds $40 in Treasury bonds (rather than $10) and $30 in loans to other banks (rather than $10). Otherwise, Melvins assets are the same as in the table. Calculate the level of capital that Melvins must hold to satisfy (i) the minimum equity ratio and (ii) the risk-based Basel requirement. [4 points]

TABLE 10.3 Capital Requirements for Melvin's Bank (A) Computing Weighted Assets Weighted Weights Assets Assets 0.0 Reserves Securities 0.0 Treasury bonds 0.5 Municipal bonds Loans 0.2 Interbank 0.5 Home mortgages 1.0 C&I 107 150 TOTAL (B) Minimum Levels of Capital Based on minimum equity ratio: Minimum capital (0.05)(total assets) (0.05) ($150) $7.50 Based on Basel requirement: Minimum capital (0.08)(weighted assets) (0.08) ($107) $8.56