Suppose Chase Bank holds following assets, 8 million bank capital, which are composed of the following:

Required Reserves: $15 million

Excess Reserves: $5 million

Mortgage Loans: $100 million

Corporate Bonds: $60 million

Stocks: $60 million

Commodities: $10 million

Do you think there are some assets that Chase bank should not hold? Why or why not? Is the bank well capitalized according to risk-weighted asset estimations?

If the housing market suddenly crashed, would Universal Bank be better off with a mark-to-market accounting system or the historical-cost system?