Urgent 2

[5] Basel ll Approach to credit Risk and Equity Requirements Assume you are a risk manager in an international bank and you have to approve or decline a number of proposals. The amount you can commit at this time is 9 million in equity. Rank the loans according to their equity requirements and decide which ones you want in the loan portfolio. Briefly justify your choices. Note: assign the guarantor's rating to the supported issue or issuer. 50,000,000 loan to Danske Bank, rated A+. Maturity: 1 year. Interest rate: 4.75% 100,000,000 loan to the government of Singapore, rated AAA. Maturity: 3 years. Interest rate: 2.25%. 100,000,000 in mortgage loans in the domestic market, 7 years. Interest rate: 5.0% 75,000,000 loan to a Ukrainian steel-maker, rated B. Maturity: 2 years Interest rate: 5.0%. 12,500,000 long-term loan to a swedish truck maker rated BBB+. Maturity: 7 years. Interest rate: 6.25%. 200,000,000 loan to a gas company in Poland, with a guarantee form the VI) Polish government, rated A-. Maturity: 3 years. Interest rate: 5.5%