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Consider a bank with the following balance sheet: Assets Liabilities Required reserves $17 million Checkable deposits $555 million Excess reserves $150 million Bank capital $20

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Consider a bank with the following balance sheet: Assets Liabilities Required reserves $17 million Checkable deposits $555 million Excess reserves $150 million Bank capital $20 million Municipal Bonds $25 million Residential Mortgages $110 million Commercial loans $273 million Calculate the bank's risk-weighted assets (RWA) and determine whether it satisfies the risk weighted capital requirements set by Basel Hint: Use the following table. Category Weight Example Reserves and treasures Claims on banks in OECD countries 1 0 2 0.2 0.5 Municipal bonds and residential mortgages 1 Loans to consumers and corporations O RWA=$120 million. The bank is complying with the capital requirements set by Basel I. O RWA=$140.5 million. The bank is complying with the capital requirements set by Basel I ORWA=$185.5 million. The bank is complying with the capital requirements set by Baseli O RWA=$98.5 million. The bank is not complying with the capital requirements set by Basel 1. O None of the above

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