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please provide answer for all questions asap 19. Assess whether a bank has adequate capital to absorb losses (10 marks) a. Assume loan losses increase
please provide answer for all questions asap
19. Assess whether a bank has adequate capital to absorb losses (10 marks) a. Assume loan losses increase by 3% of total assets, what will be the pre-tax loss after? (express as % of total assets) (2 marks) b. Assume a tax rate of 30%, what will be the after-tax loss? (as % of total assets) (2 marks) C. Now, with the post tax loss above, did the bank have adequate capital to absorb the loss, (4 marks) 1) Before Equity was reduced? By how many times? (2 marks) il) After the Equity was reduced? (2 marks) d. Assume that there is a run on deposits, and the bank has to sell will the subordinated note holders get and why? (2 marks) assets at book value, how much 19. Assess whether a bank has adequate capital to absorb losses (10 marks) a. Assume loan losses increase by 3% of total assets, what will be the pre-tax loss after? (express as % of total assets) (2 marks) b. Assume a tax rate of 30%, what will be the after-tax loss? (as % of total assets) (2 marks) C. Now, with the post tax loss above, did the bank have adequate capital to absorb the loss, (4 marks) 1) Before Equity was reduced? By how many times? (2 marks) il) After the Equity was reduced? (2 marks) d. Assume that there is a run on deposits, and the bank has to sell will the subordinated note holders get and why? (2 marks) assets at book value, how much Step by Step Solution
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