WBS Bank: Balance Sheet ( millions) Assets Liability Cash 15 Deposit 370 Subordinated debts 90 UK...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
WBS Bank: Balance Sheet (£ millions) Assets Liability Cash 15 Deposit 370 Subordinated debts 90 UK government bonds 20 OECD interbank loans 130 Uninsured mortgages Equity 250 Common stock 85 Company loans 135 Disclosed reserves Total 550 Total 550 According to the above balance sheet and the Basel I specifications, a) Calculate the Tier 1 capital, Tier 2 capital, and risk weighted asset for WBS Bank under Basel I Accord. (10 marks) b) Calculate the capital adequacy ratios and explain whether the capital adequacy ratios meet the requirement of Basel I Accord. (7 marks) c) Critically discuss the rationale behind having capital adequacy requirements for banks and explain the relationship between the capital adequacy and investment choices for banks. WBS Bank: Balance Sheet (£ millions) Assets Liability Cash 15 Deposit 370 Subordinated debts 90 UK government bonds 20 OECD interbank loans 130 Uninsured mortgages Equity 250 Common stock 85 Company loans 135 Disclosed reserves Total 550 Total 550 According to the above balance sheet and the Basel I specifications, a) Calculate the Tier 1 capital, Tier 2 capital, and risk weighted asset for WBS Bank under Basel I Accord. (10 marks) b) Calculate the capital adequacy ratios and explain whether the capital adequacy ratios meet the requirement of Basel I Accord. (7 marks) c) Critically discuss the rationale behind having capital adequacy requirements for banks and explain the relationship between the capital adequacy and investment choices for banks.
Expert Answer:
Answer rating: 100% (QA)
CAR 4380 As per BaselI accord CAR should be 8 since this bank holds ratio of 4380 it meets the requi... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Posted Date:
Students also viewed these chemical engineering questions
-
According to the above excerpt, what factors influence the price elasticity of demand for cigarettes? What other factors not mentioned in the article might also influence the price elasticity of...
-
Under Basel III, what four capital ratios must DIs calculate and monitor?
-
A few months after joining university, YOU got a casual job as a finance trainee in a financial firm via Work Integrated Learning which is part of your bachelors degree at Deakin University. You...
-
Please answer all questions from 1 to 12 4. Work-Power-Energy 7. A body of mass m, accelerates uniformly from rest to v, in time t,, The instantaneous power delivered to the body as a function of...
-
What are the requirements for effective inventory management?
-
Presented below are excerpts from the 2012 annual report of Marstons PLC, a UK-based company that operates pubs. Property, plant and equipment ¢ Freehold and leasehold properties are initially...
-
Match the measures of worth in the first column with the appropriate unit of measure that results from the analysis. Measure of Worth (a) Annual Worth (b) External Rate of Return (c) Future Worth (d)...
-
Machinery purchased for $52,000 by Carver Co. in 2008 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation has been entered for 5...
-
Westeros, Inc. receives scabbards (sheath for a sword) from two different suppliers. 70 percent of its scabbards come from Knights Watch, LLC, while 30 percent come from Crow, Inc. Records indicate...
-
The following is a cross-tabulation of whether respondents rent or own their home by social class for a sample of 240 heads of household: a. Which is the independent variable and which is the...
-
Gary is a sole proprietor and sold several business assets in the current year. The sales resulted in 1231 gains of $12,500 and 1231 losses of $14,800. What is the character of the Section 1231 gains...
-
How many electrons are there in -3C of charge? What about -5mC? -19nC?
-
The magnitude of a force vector F is 88.6 newtons (N). The x component of this vector is directed along the +x axis and has a magnitude of 70.0 N. The y component points along the +y axis. (a) Find...
-
Alice(A) and Bob(B) use ElGamal encryption system with public key parameters: q = 23, g = 5, Alice chooses the secret key, XA = 10. Bob chooses the random integer k = 6, and wants to encrypt the...
-
12. For a piece of material, the steady state flow of material across its thickness is 0.250 x 10 kg/m-hr. If the concentrationon the high side of the material is 1.85 kg/m and is 0.06 kg/m on the...
-
Consider a situation wherein an exploration vehicle that has a mass of 250 kilogram on Earth ( gravityEarth = 9.8 m/s ) is sent to the Moon and planet Mars to explore their surfaces. What is the mass...
-
SoFIFTH time posting this and at this point im just lost!PLEASE REFERENCE THE SECOND PHOTO FOR INCORRECTCOORDINATE! Express the point given in Cartesian coordinates in spherical coordinates \( (ho,...
-
1. What are some current issues facing Saudi Arabia? What is the climate for doing business in Saudi Arabia today? 2. Is it legal for Auger's firm to make a payment of $100,000 to help ensure this...
-
Size of Accounts Receivable Essence of Skunk Fragrances, Ltd., sells 4,500 units of its perfume collection each year at a price per unit of $400. All sales are on credit with terms of 2/10, net 40....
-
NPV versus IRR Bumble??s Bees, Inc., has identified the following two mutually exclusive projects: a. What is the 1RR for each of these projects? Using the IRR decision rule, which project should the...
-
Blumes Formula Over a 30-year period an asset had an arithmetic return of 12.8 percent and a geometric return of 10.7 percent. Using Blumes formula, what is your best estimate of the future annual...
-
Let \(\left\{\mathbf{X}_{n}ight\}_{n=1}^{\infty}\) be a sequence of \(d\)-dimensional random vectors that converge in distribution to a random vector \(\mathbf{X}\) as \(n ightarrow \infty\). Let...
-
Let \(\mathbf{X}\) be a \(d\)-dimensional random vector with distribution function \(F\). Let \(g: \mathbb{R}^{d} ightarrow \mathbb{R}\) be a continuous function such that \(|g(\mathbf{x})| \leq b\)...
-
In the context of the proof of Theorem 4.3, prove that \[\lim _{n ightarrow \infty}\left|\int_{a}^{b} g_{m}(x) d F(x)-\int_{a}^{b} g(x) d F(x)ight| for any \(\delta_{\varepsilon}>0\). Theorem 4.3...
Study smarter with the SolutionInn App