10. Look at the following simplified bank balance sheet. Assume that the bank has no off-balance-sheet...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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
Expert Answer:
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:
Students also viewed these finance questions
-
Write a function that reads a Mathematical expression from a text file and verifies the validity of paranthesis in the expression using a Stack.
-
Using the protocols below and any other relevant material students draft 5 questions that incorporate aspects of the material elements of the offense outlined in the scenario below. The questions...
-
Which is false? The Chinese government is reluctant to let the yuan appreciate against the US dollar because: Appreciation of the yuan would increase the price of real estate for young Chinese...
-
A cement manufacturer has supplied the following data: Tons of cement produced and sold........................................................ 267,000 Sales...
-
Pulley A rotates with the angular velocity and angular acceleration shown. Determine the acceleration of block E at the instant shown. 50 mm = WA 40 rad/s % = 5 rad/s E A 50 mm B 125 mm
-
Identify a minimum of five kinds of motions some- times filed in divorce actions while the litigation is pending.
-
Following is the December 31, 2013, trial balance for Radnor Citys General Fund. Based on this information, prepare (a) a statement of revenues, expenditures, and changes in fund balance, (b) a...
-
Explain Demings quality principles? with Example
-
Carter Enterprises is involved in the soybean business in South Carolina, Alabama, and Georgia. The president of the company, Earl Carter, goes to a commodity sale once a month where he buys and...
-
1. Sketch the bifurcation diagram for r' r3 ax.
-
A square of side length V2D has charge +Q on three of the corners and charge - Q on the bottom right corner. A charge + q is placed at the exact centre of the square. What is the net force on this...
-
There is a window in the floor, and you can see that you re in a rocket which has just taken off from the surface of an alien planet. By taking careful measurements out that window you determine that...
-
Ruth is a self-employed lawyer and is required to take a week of continuing legal education every year to maintain her license. This year she paid $1,400 in course fees for her continuing legal...
-
An object of mass M at rest is divided into three equal parts due to internal forces. Immediately after the explosion, the first piece has a velocity of = 400 + 300 (m/s), the second piece has a...
-
1) Your delivery business uses a rental truck. In an attempt to estimate future truck rental costs you have collected the following information: Month January February March April May June Miles...
-
2. Let f'(x) = 3-4 Assume the domain of f is (-o, -1) U (-1, 00). Note you are being given the derivative of f but asked questions about f itself. +1 (a) Find the intervals where f is increasing and...
-
Which provision could best be justified as encouraging small business? a. Ordinary loss allowed on $ 1244 stuck. b. Percentage depletion. c. Domestic production activates deductions. d. Interest...
-
Hands Insurance Company issued a $90 million, one-year note at 8 percent add-on annual interest (paying one coupon at the end of the year) or with an 8 percent yield. The proceeds were used to fund a...
-
How can financial institutions invest in high-risk assets with funding provided by low-risk liabilities from savers?
-
Classify the following items as (1) On-balance-sheet assets, (2) On-balance-sheet liabilities, (3) Off-balance-sheet assets, (4) Off-balance-sheet liabilities, or (5) Capital account. Classification
-
Show that under a local gauge transformation (14.5) the vector potential A and the form of the wavefunction (28.7) are changed, but no observable is affected. Data from Eq. 28.7 Data from Eq. 14.5...
-
Demonstrate that both the Berry phase \(\gamma_{n}\) and the Berry curvature \(\boldsymbol{\Omega}_{n}(\boldsymbol{R})\) are invariant under a local gauge transformation.
-
Evaluate the formula for the Gauss-Bonnet theorem in Box 28.3 for a 2-sphere and show that this leads to the usual relation for the area of a sphere. The local curvature for a 2-surface is the...
Study smarter with the SolutionInn App