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Regulators calculate that DLC bank (see Section 2.2) will report a profit that is normally distributed with a mean of $0.6 million and a standard
Regulators calculate that DLC bank (see Section 2.2) will report a profit that is normally distributed with a mean of $0.6 million and a standard deviation of $2million. How much equity capital in addition to that in Table 2.2 should regulators require for there to be a 99.9% chance of the capital not being wiped out by losses? (Show the process)
Table 2.2 Summary Balance Sheet for DLC at End of 2018 ($ millions Assets Liabilities and Net Worth Cash Marketable Securities Loans Fixed Assets Total Deposits Subordinated Long-Term Debe Equity Capital 90 10 80 100 Total 100Step by Step Solution
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