Consider the following loan categories:

 

Loan Type	Singapore Banks Total ($b)	Bank A ($b)	Bank B ($b)	Bank C ($b)	Bank D ($b) *
Real Estate	4,800	21	40	10
Commercial	10,200	171	48	12
Industrial	3,200	42	40	10
Consumer	2,800	18	64	8
Travel and Hospitality	14,000	20	60	45
Pharmaceuticals	5,000	10	50	55
Other	15,000	48	40	10

 

1. * Bank D is only investing in short-term government securities.

QUESTION 7a 

Which bank has the most diversified portfolio? Show all calculations. [Hint: Use the formula presented in the course.]
 

QUESTION 7b [ 8 Marks]

 

Explain why the approach that you employed in Question 7a has benefits and limitations. Ensure that the benefits and limitations are justified and clearly explained. What impact would COVID -19 have on your answer.

Answer rating: 100% (QA)

To determine which bank has the most diversified portfolio among the Singapore Banks we can calculate the HerfindahlHirschman Index HHI for each banks loan portfolio The HHI measures the concentration ... View the full answer