question 4

Alaska Bank reports the following items on its balance sheet:

Cash $200 million;

U.S. government securities $150 million;

Residential real-estate loans $300 million; and

Corporate loans $350 million.

The items in the banks off-balance sheet are as follows:

Standby credit letters $20 million and

Long-term credit commitments to corporations $160 million.

(i) Calculate Alaska Banks total risk-weighted assets. (15 marks)

(ii) If Alaska Bank had reported that its Tier I capital is $30 million and itsTier 2 capital is $20 million. Explain if Alaska bank is having a capital deficiency ( 15 marks )