Question C2 (a) Onshore Bank has $20 million in assets, with risk-adjusted assets of $10 million. CET1 capital is $500,000, additional Tier I capital is $50,000 and Tier II capital is $400,000. Calculate the new (1) amount of risk-adjusted assets, (2) CET1 risk-based ratio, (3) Tier I risk-based capital ratio and (4) total risk-based capital ratio after considering the following transactions separately. (i) The bank issues $2 million of Certificate of Deposits (CDs) and uses the proceeds to finance single family mortgage to individual homeowners. (4 marks) (ii) The bank issues $100,000 of common stock to redeem the preferred stock. (4 marks) (b) Explain the reason for restricted use of Internal Ratings-based Approach and predominance of Standard Approach for accessing credit risk in Basel III. (4 marks) (c) Classify the MOST suitable type of regulations that the following policies belong to. (i) Deposit Insurance Scheme (ii) Minimum capital requirement for obtaining bank license in Hong Kong (iii) Reserve requirement