3. (Capital Adequacy under Basel I) National Bank has the following balance sheet (amount in millions)....

 

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3. (Capital Adequacy under Basel I) National Bank has the following balance sheet (amount in millions). Assets Liabilities and Equity Cash $50 Deposits $450 Treasury bills 40 Cumulative preferred stock 100 Residential mortgages* 300 Common stock 180 Corporate bonds 400 Retained earnings 60 Total assets $790 Total liabilities and equity $790 *uninsured mortgage. The bank also has off-balance sheet items including $30 million of Tesla per- formance bonds, $20 million OECD bank 3-month standby letter of credit and $40 million forward purchase of crude oil from OECD public sector entity. Under Basel I Accord: (a) What is the risk-weighted on-balance-sheet asset? What is the risk-weighted off-balance-sheet asset? (b) What is the minimum level of total regulatory capital and Tier 1 capital, respectively? (c) What are the amounts of Tier 1 and Tier 2 capitals, respectively? Does the bank have adequate total regulatory capital and Tier 1 capital? 3. (Capital Adequacy under Basel I) National Bank has the following balance sheet (amount in millions). Assets Liabilities and Equity Cash $50 Deposits $450 Treasury bills 40 Cumulative preferred stock 100 Residential mortgages* 300 Common stock 180 Corporate bonds 400 Retained earnings 60 Total assets $790 Total liabilities and equity $790 *uninsured mortgage. The bank also has off-balance sheet items including $30 million of Tesla per- formance bonds, $20 million OECD bank 3-month standby letter of credit and $40 million forward purchase of crude oil from OECD public sector entity. Under Basel I Accord: (a) What is the risk-weighted on-balance-sheet asset? What is the risk-weighted off-balance-sheet asset? (b) What is the minimum level of total regulatory capital and Tier 1 capital, respectively? (c) What are the amounts of Tier 1 and Tier 2 capitals, respectively? Does the bank have adequate total regulatory capital and Tier 1 capital?