10. Look at the following simplified bank balance sheet. Assume that the bank has no off-balance-sheet...
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10. Look at the following simplified bank balance sheet. Assume that the bank has no off-balance-sheet commitments. Using the three capital adequacy ratios and the leverage ratio criteria shown in the attached table, determine if the bank is well-capitalized. adequately capitalized, undercapitalized, significantly undercapitalized, of critically undercapitalized. XYZ bank Risk weight 0% Deposits 0% 10-year sub debt 100% Perpetual Non Cum Pfd stk common stock 100% Retained earnings 150% total Cash & receivables Investments in treasuries Commercial Loans BB+ Single family mortgages Consumer loans Commercial loans CCC+ Physical assets Total assets $3 $7 $15 $40 $20 $25 $15 $125 50% 100% Calculate the following ratios: What is the overall rating? a.Common equity Tier I risk based ratio b.Tier I risk based ratio c. Total Risk based ratio d. Tier I leverage ratio $106 $6 $1 $5 $7 $120 tier 2 tier 1 tier 1 tier 1 10. Look at the following simplified bank balance sheet. Assume that the bank has no off-balance-sheet commitments. Using the three capital adequacy ratios and the leverage ratio criteria shown in the attached table, determine if the bank is well-capitalized. adequately capitalized, undercapitalized, significantly undercapitalized, of critically undercapitalized. XYZ bank Risk weight 0% Deposits 0% 10-year sub debt 100% Perpetual Non Cum Pfd stk common stock 100% Retained earnings 150% total Cash & receivables Investments in treasuries Commercial Loans BB+ Single family mortgages Consumer loans Commercial loans CCC+ Physical assets Total assets $3 $7 $15 $40 $20 $25 $15 $125 50% 100% Calculate the following ratios: What is the overall rating? a.Common equity Tier I risk based ratio b.Tier I risk based ratio c. Total Risk based ratio d. Tier I leverage ratio $106 $6 $1 $5 $7 $120 tier 2 tier 1 tier 1 tier 1
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Answer rating: 100% (QA)
To calculate the capital adequacy ratios mentioned in the question we first need to calculate the riskweighted assets RWAs using the risk weights prov... View the full answer
Related Book For
Financial Institutions Management A Risk Management Approach
ISBN: 978-0071051590
8th edition
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
Posted Date:
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