Refer to the 2011 financial statements and accompanying notes of Royal Bank of Canada (RBC)
that are found on the company's website ('www.royalbank.ca) or www.sedar.com.
(a) What percentage of total assets is held in investments (2011 versus 2010)? Note that RBC holds a significant loan portfolio also. What is the business reason for holding loans versus securities?
Comment on how the investments are classified and presented on the balance sheet.
(b) What percentage of total interest income comes from securities (2011 versus 20!0)? Are there
any other lines on the income statement relating to securities? What percentage of net income
relates to securities (20 11 versus 20 I 0)? Calculate an approximate return on the investments in
securities. Comment on the return, while looking at the nature of the securities that are being
(c) Read the notes to the financial statements that are about securities and note the valuation