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QUESTION ONE ASSETS Cash & Treasury Securities Repurchase Agreements Municipal Bonds Single Family Home Mortgages CMOS Commercial Loans Agricultural loans Bank Buildings TOTAL Risk Weighted
QUESTION ONE ASSETS Cash & Treasury Securities Repurchase Agreements Municipal Bonds Single Family Home Mortgages CMOS Commercial Loans Agricultural loans Bank Buildings TOTAL Risk Weighted Assets Amount ($) Risk Weight Amount $2,000 0% 1000 20% 200 1500 20% 300 2700 50% 1350 2500 50% 1500 100% 1500 2100 100% 2000 I 100% 2000 $15,300 $5,350 c. a. What is the Risk - Weighted asset amount for cash and treasury securities? b. What is the Risk - Weighted asset amount for CMOS? How many dollars of Category 2 Category 3 and Category 4 assets does the bank have? d. What is the minimum Tier 1 capital for this bank? e. What is the minimum Total capital for this bank? f. Why does cash have a 0% risk weight under BASEL 1? QUESTION TWO Describe the electronic funds transfer, point of sale and the ACH system under the electronic money. QUESTION THREE Discuss the five C's of good credit and the five C's of bad credit. Discuss their importance in credit analysis. QUESTION FOUR Under loan sales, differentiate between loan with recourse and loan without recourse under managing credit risk. QUESTION FIVE Discuss which is more expensive for a bank: Extending credit to a customer who ultimately defaults or denying credit to a customer who would have paid the bank back. Formula Sheet Total Capital = Tier 1 + Tier 2 capital Minimum Tier 1 - 4% of Risk Weighted Asset Amount Minimum Total Capital - 8% of Risk Weighted Asset Amount
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