This is a portion of a bank stress test Explain with reasoning how much of the Net
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Question:
This is a portion of a bank stress test
Explain with reasoning how much of the Net Income to distribute to shareholders as Dividends and how much to direct to retained Earnings; and (b) how much of Retained Earnings to direct to Reserves and how much to Cash & Money Market investments.
The point of the question is reasoning only, not the particular amounts.
Net Income $700,000
Balance Sheet assets (if allNet Income is included) $42,500,000
Risk-Weighted Assets (if allNet Income is included) $25,000,000
Net Worth $2,500,000
Assume required capital is 8% of Risk-Weighted Assets.
Related Book For
Intermediate Accounting
ISBN: 978-1259548185
8th edition
Authors: David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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