ONE 0 0.4. assets. are K450,000, current asset is A. Consider a company for which current K200,000, total assets are K690,000, earnings before interest and taxes is K80,000, sales are K2,300,000, the market value of equity is K500,000, total liabilities is K260,000, and retained earnings is K320,000. I. Compute these ratios using the Altman Z-score: X1, X2, X3, X4, and X5. II. [5 Marks] Assess the credit risk (z-score) of a potential borrowing firm and advise the bank on whether to give the loan to the company or not. [4 Marks] A. Access Bank holds a portfolio of K900m credit card receivables (outstanding loan balances on credit cards). The average annual default rate over the past 30 years for similar exposures has been 1%. When defaults have taken place the bank has made a loss of 80%. Compute the expected loss. [3 Marks] B. A trader buys 300 shares of a stock on margin. The price of the stock is K25. The initial margin is 60% and the maintenance margin is 30%. How much money does the trader have to borrow from the broker? For what share price is there a margin call? [4 Marks] C. Suppose a trader shorts 800 CEEC shares in January when the price per share is K80 and closes out the position by buying them back in April when the price per share is K100. Suppose further that a dividend of K1 per share is paid in February. If the cost of borrowing is K2/share, detail the profit and loss account for the trader. [4 Marks] D. Suppose that a trader shorts 500 shares when the price is K80. Suppose that the initial margin is 150% and the maintenance margin is 125%. What share price would lead to a margin call of K3000? [5 Marks] [Total: 25 Marks]