First Bank has the following balance sheet in millions of dollars with the Basel II risk...
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First Bank has the following balance sheet in millions of dollars with the Basel II risk weights given in parentheses: Table 1: Assets U.S. Govt T-Bonds (0%) Municipal Bonds (20%) High Yield Corporate bonds (50%) Consumer Loans AAA-rated (20%) Commercial Loans BBB-rated (100%) Total Amount $150 Deposits $250 Subordinated Debt (Tier II) $350 Preferred Stock (Tier II) $450 $300 Equity (Tier I) Liabilities $1,500 Total Amount $1,420 $20 $25 $35 $1,500 Question 4: Based on the information from table 1 in Question 3 answer the following: The bank wishes to keep its Tier 1 capital ratio at 6% of risk adjusted assets. It will sell a portion of its High-Yield Corporate Bonds and invest the proceeds in U.S. government bonds. In terms of dollars, how much of the Corporate Bonds should the bank sell and then reinvest in U.S. government bonds? Show your answer to the nearest whole dollar in the xx format, $86 enter as 86 First Bank has the following balance sheet in millions of dollars with the Basel II risk weights given in parentheses: Table 1: Assets U.S. Govt T-Bonds (0%) Municipal Bonds (20%) High Yield Corporate bonds (50%) Consumer Loans AAA-rated (20%) Commercial Loans BBB-rated (100%) Total Amount $150 Deposits $250 Subordinated Debt (Tier II) $350 Preferred Stock (Tier II) $450 $300 Equity (Tier I) Liabilities $1,500 Total Amount $1,420 $20 $25 $35 $1,500 Question 4: Based on the information from table 1 in Question 3 answer the following: The bank wishes to keep its Tier 1 capital ratio at 6% of risk adjusted assets. It will sell a portion of its High-Yield Corporate Bonds and invest the proceeds in U.S. government bonds. In terms of dollars, how much of the Corporate Bonds should the bank sell and then reinvest in U.S. government bonds? Show your answer to the nearest whole dollar in the xx format, $86 enter as 86
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Related Book For
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders, Marcia Cornett
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