A financial institution starts the first day of operations with $10 million in capital. It has $150

million in checkable deposits. It makes $35 million commercial loan and 55 million in mortgages with the following terms: 200 standard 3-year fixed rate mortgages with a nominal annual rate of interest of 5.25%, each for $250,000. The required reserve ratio against deposits is 10%.

 

A.) What does the bank balance sheet look like?

B.)How well capitalized is the bank?

C.)Calculate the risk-weighted assets and the risk-weighted capital ratio.

Answer rating: 100% (QA)

A The banks balance sheet would appear as follows Bank Balance Sheet Assets Reserves 15 million 10 o... View the full answer