Wonder Bank is an established player in the Australian market with the following liability side. Liabilities Amount ($ billion) Withdrawable deposits 400 Long-term debt 120 Coco bonds (Tier 2) 10 10 Share premium reserve Common shares 40 In addition, the bank holds the following off-balance sheet items. Risk weights for all off-balance sheet items are 100%. Item Current exposure Amount ($ billion) 50 100 Credit conversion factor 30% Letters of credit 3-year Interest Rate Swap $5 billion out of the money 5% a. Compute Wonder Bank's off-balance sheet risk-weighted assets. (3 marks) b. Assume that the minimum Tier 1 capital ratio is 8%, and the minimum Total capital ratio is 10.5%. Wonder Bank has $406 billion in on-balance sheet risk-weighted assets. Compute the bank's Tier 1 capital ratio and total capital ratio (2 decimals), and interpret. (7 marks) Wonder Bank is an established player in the Australian market with the following liability side. Liabilities Amount ($ billion) Withdrawable deposits 400 Long-term debt 120 Coco bonds (Tier 2) 10 10 Share premium reserve Common shares 40 In addition, the bank holds the following off-balance sheet items. Risk weights for all off-balance sheet items are 100%. Item Current exposure Amount ($ billion) 50 100 Credit conversion factor 30% Letters of credit 3-year Interest Rate Swap $5 billion out of the money 5% a. Compute Wonder Bank's off-balance sheet risk-weighted assets. (3 marks) b. Assume that the minimum Tier 1 capital ratio is 8%, and the minimum Total capital ratio is 10.5%. Wonder Bank has $406 billion in on-balance sheet risk-weighted assets. Compute the bank's Tier 1 capital ratio and total capital ratio (2 decimals), and interpret. (7 marks)