Question: 8. Second Bank has the following balance sheet in millions of dollars, with the Basel risk weights given in parentheses. a. Does the bank

8. Second Bank has the following balance sheet in millions of dollars,

8. Second Bank has the following balance sheet in millions of dollars, with the Basel risk weights given in parentheses. a. Does the bank have enough capital to meet the requirements as specified by Basel II? b. The bank wishes to keep its Tier 1 ratio at s%, They will sell a portion of their consumer loans and invest them in U.S. government bonds. How much consumer loans should they sell? $ 950m $1oom Deposits $200m Subordinated Debt ((Tier II) $300m Preferred Stock (Tier II) U.S. Govt T-Bonds (o%) 1om Govt. Agency FNMA Bonds (20%) $ 25m University Dorm bonds (50%) Consumer Loans AAA-rated (20%) $20om Equity (Tier I) $ 15m Commercial Loans BBB-rated (100%) $20om $100om $100om Total

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