Question
The following table is the balance sheet for Bank A: Assets Risk weight factors Risk adjusted assets Cash 120 0% U.S. Treasury Securities 240 0%
The following table is the balance sheet for Bank A:
Assets |
| Risk weight factors | Risk adjusted assets |
Cash | 120 | 0% | |
U.S. Treasury Securities | 240 | 0% | |
Bank reserves | 60 | 0% | |
U.S. government agency securities | 20 | 20% | |
Mortgage loans | 350 | 50% | |
Consumer loans | 150 | 100% | |
Construction loans | 10 | 100% | |
Corporate debt securities | 50 | 100% |
|
Total | 1000 | ||
Liabilities and Equity |
|
|
|
Transaction deposits | 700 | ||
Saving accounts | 100 | ||
Negotiated CDs | 50 | ||
Repos | 70 | ||
Subordinated debt | 20 |
|
|
Liabilities | 940 | ||
Common equity | 30 | ||
Retained earnings | 15 | ||
Preferred stocks | 15 |
|
|
Equity | 60 |
(1) Calculate Common Equity Tier 1 capital. (0.5 point)
(2) Calculate Additional Tier 1 capital. (0.5 point)
(3) Calculate Tier II capital. (0.5 point)
(4) Calculate the credit risk-adjusted assets using the risk weight factors. (0.5 point)
(5) Calculate the total capital. (0.5 point)
(6) Calculate CET1/ Credit risk adjusted assets
Tier I / Credit risk adjusted assets
Total capital / Credit risk adjusted assets
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