Nittany Lion Bank has the following balance sheet (in $m), with the risk weights in parentheses....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Nittany Lion Bank has the following balance sheet (in $m), with the risk weights in parentheses. Assets Cash (0%) $21 OECD interbank deposits (20%) $25 Mortgage loans(50%) $70 Consumer loans (100%) $70 Reserve for loan losses __$(1) Total assets $185 Liabilities and Equity. Deposits $176 Subordinated debt (5 years) $2 Cumulative preferred stock_ $2 Equity (common stock)__ $5 Total liabilities and equity $185 Nittany Lion Bank also has the following off-balance sheet item: A $30 million in performance-related standby letter of credit (SLCs) to a public corporation with a conversion factor of 50%. Simplifying assumptions: • Risk weights of all off-balance sheet items are equal to 100%. • Regulator's CET1 ratio for adequate capitalization is 4.5%, Tier 1 ratio is 6.0 %, and Total capital ratio is 8.0%. There are no restrictions on how much subordinated debt and reserves you can count as Tier Il capital. • Items that do not show up on the balance sheet (e.g.. Goodwill) have a value of zero. Answer the following question using the information above. What is Nittany Lion Bank's total risk-weighted assets (in $m)? 215 125 110 185 Nittany Lion Bank has the following balance sheet (in $m), with the risk weights in parentheses. Assets Cash (0%) $21 OECD interbank deposits (20%) $25 Mortgage loans(50%) $70 Consumer loans (100%) $70 Reserve for loan losses __$(1) Total assets $185 Liabilities and Equity. Deposits $176 Subordinated debt (5 years) $2 Cumulative preferred stock_ $2 Equity (common stock)__ $5 Total liabilities and equity $185 Nittany Lion Bank also has the following off-balance sheet item: A $30 million in performance-related standby letter of credit (SLCs) to a public corporation with a conversion factor of 50%. Simplifying assumptions: • Risk weights of all off-balance sheet items are equal to 100%. • Regulator's CET1 ratio for adequate capitalization is 4.5%, Tier 1 ratio is 6.0 %, and Total capital ratio is 8.0%. There are no restrictions on how much subordinated debt and reserves you can count as Tier Il capital. • Items that do not show up on the balance sheet (e.g.. Goodwill) have a value of zero. Answer the following question using the information above. What is Nittany Lion Bank's total risk-weighted assets (in $m)? 215 125 110 185
Expert Answer:
Answer rating: 100% (QA)
a Compute risk adjusted assets as follows Cash 0 21 OECD inter bank deposits 20 25 50 70 100 70 Tota... View the full answer
Related Book For
Corporate Financial Accounting
ISBN: 978-1133952411
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
Posted Date:
Students also viewed these finance questions
-
A corporation issued $2,000,000 of common stock in exchange for $2,000,000 of fixed assets. Where would this transaction be reported on the statement of cash flows?
-
A corporation issued $2,000,000 of common stock in exchange for $2,000,000 of fixed assets. Where would this transaction be reported on the statement of cash flows?
-
A taxpayer owned 1,000 shares of common stock in Barlo Corporation, which manufactures automobile parts. The taxpayers cost basis in the stock was $82,700. Last week, Barlo declared bankruptcy and...
-
Assume the following for the Howard Saks firm: Actual earnings of $28,000, beginning book value of $250,000, ending book value of $350,000, cost of capital of 6%. What are their abnormal earnings?
-
The government of India has made killing Bengal tigers illegal, but poaching of the endangered animal continues. List some possible reasons that the ban hasnt been very successful, and suggest an...
-
Looking at Erin Meyers cultural mapping, what kind of problems would you anticipate for a German manager in Indonesia?
-
Which class of stockholders takes the greater investment risk? a. Common b. Preferred c. Neither; bondholders take the most risk d. Both preferred and common take equal risk
-
High-low method Ken Howard, financial analyst at JVR Corporation, is examining the behavior of quarterly maintenance costs for budgeting purposes. Howard collects the following data on machine-hours...
-
1. Need to have at least 3 out of 5 attributes better than the benchmark (row 26, Cells D-I), duration can be longer if you feel that the yields will drop 2. A minimum of 12 ETFS need to be used to...
-
Required Edutech Ltd is an online education institution that provides online education to tertiary learners who are pursuing undergraduate degrees, certificates, and diplomas. Edutech Ltd expanded...
-
Jerome purchased 100 shares of Badminton stock for $8 per share, and paid $50 in transaction costs at the time of the purchase. Two years later, Jerome sold his 100 shares at $10 per share. According...
-
5. Suppose workers may supply labor hours h at wage w. Their earned income will therefore be wh. They may also receive some government transfers G, and have non-labor income R. They buy consumptions...
-
Ford motor company has a beta of 0.95. If the expected return on the market is 7.2%, and the risk free rate is 1.1%, what is the cost of equity capital according to the CAPM?
-
On March 1 , 2 0 1 3 Simple Inc. had $ 1 2 5 of supplies. Throughout the month of March 2 0 1 3 Simple Inc. purchased $ 3 7 3 of additional supplies. On March 3 1 , 2 0 1 3 , Simple determined that...
-
ABC Hope Clinic has an outstanding bond that sells in the market for $1112. The bonds mature in 8 years, pay interest semiannually, and carry a 9% coupon rate on $1,000 par value. What is ABC Hope's...
-
Electric Field due to Multiple Point Charges Two point charges are placed on the x axis. (Figure 1 )The first charge, q = 8.00 nC, is placed a distance 16.0 m from the origin along the positive x...
-
2.00 mL soda sample was added with HCI and diluted to 100 mL. Given the following absorbance for the standards and sample, calculate the amount of caffeine and benzoic acid in the given sample....
-
Should we separate the debt and equity features of convertible debt? Team 1: Pro separation: Present arguments in favor of separating the debt and equity features of convertible debt. Team 2: Against...
-
A business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation pay is $42,000. a. Journalize...
-
Balance sheet data for Peacock Company on December 31, the end of the fiscal year, are shown below. Prepare a comparative balance sheet for 2014 and 2013, stating each asset as a percent of total...
-
The financial statements for Nike, Inc., are presented in Appendix B at the end of the text. The following additional information (in thousands) is available: Accounts receivable at May 31, 2008........
-
What steps are necessary to record services performed on account for Wild Water Sports?
-
How does the QuickBooks Accountant software respond if a bill is entered with a vendor name that is not included on the vendor list?
-
What are the steps for paying sales tax?
Study smarter with the SolutionInn App