Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Onshore Bank has $32 million in assets, with risk weighted assets of $22 million Core Equity Tier 1 (CET) capital is $1,000,000, additional Tier

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Onshore Bank has $32 million in assets, with risk weighted assets of $22 million Core Equity Tier 1 (CET) capital is $1,000,000, additional Tier 1 capital $340,000, and Tier II capital is $424,000 The current value of the CET1 ratio is 4.55 percent, the Tier I ratio is 6.09 percent, and the total capitaliatio is 8.02 percent Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions a. The bank repurchases $112,000 of common stock with cash b. The bank issues $3.2 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 80 percent c. The bank receives $512,000 in deposits and invests them in T-bills d. The bank issues 5812,000 in common stock and lends it to help finance a new shopping mail. The developer has an A+ credit rating e. The bank issues $2.2 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds f. Homeowners pay back $5.2 million of imortgages with loan-to-value ratios of 40 percent and the bank uses the proceeds to build new ATMs Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F The bank repurchases $112,000 of common stock with cash. (Round your percentage answers to 2 decimal places (4.9 32.16) CET1 ratio Tier I ratio 9 Total capital ratio %6 The bank issues $3.2 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of so percent. (Round your percentage answers to 2 decimal places (e.g, 32.16)) CET1 ratio Tier 1 ratio Total capital ratio N The bank receives $512,000 in deposits and invests them in T-bills (Round your percentage answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio 96 The bank issues $812,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. (Round your percentage answers to 2 decimal places. (e.g. 32.16)) CET1 rubo Tier 1 ratio Total capital cafio T6 Required A Required B Required C Required D Required E Required F The bank issues $2.2 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds (Round your percentage answers to 2 decimal places (e.0 32.16)) CET1 ratio Tier 1 ratio Total capital rabo T Homeowners pay back $5.2 million of mortgages with loan-to-value ratios of 40 percent and the bank uses the proceeds to build new ATMs (Round your percentage answers to 2 decimal places. (e.g., 32.16)) CET10 Ther 1 ratio Total capital ratio 96 56

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Investments

Authors: Zvi Bodie, Alex Kane, Alan Marcus

9th edition

78034698, 978-0077502287, 77502280, 978-0078034695

More Books

Students also viewed these Finance questions

Question

Most mutual fund companies offer more than one type of fund. LO.1

Answered: 1 week ago