QUESTION 4

The following balance sheet is available for Bank Latimer.
Does the bank have enough capital to meet the requirements as specified by Basel II where the minimum
Tier I capital requirement is 6% and the minimum Tier I + 2 capital requirement is 8%?
Use the Table in the Ch 13 PowerPoint to determine the risk weights.
U.S. Treasury Bonds (0%)	$300	Deposits	$1,725
Yorktown Municipal Bonds (20%)	$150
Mortgage Bonds (50%)	$300	Preferred Stock (Tier 2)	$10
Consumer Loans A+ rated (50%)	$400
Consumer Loans BB- (150%)	$650	Equity (Tier 1)	$65
Total	$1,800		$1,800