The following is the summary of the balance sheets of the Bank of Reno in the year 2020. Please provide answers to the following questions.

a) How much Tier 1 capital does the bank have? (5 points)

b) How much Tier 2 capital does the bank have? (5 points)

c) Calculate the Tier 1 risk-based capital ratio, Total risk-based capital ratio, and leverage capital ratio for the bank respectively. (10 points)

d) Is the bank adequately capitalized for its on-balance sheet assets based on the Basle standards? (5 points)

Risk Weight Cash and Treasury Securities 2,000$ 0%

Deposits 8,000$

Repurchase Agreements 1,000$ 20%

CDs 6,000$

Municipal Bonds 1,500$ 20%

Subordinated Debt 250$

Single Family Home Mortgages 2,700$ 50%

Common Stock 400$

CMOs 2,500$ 50%

Retained Earnings 350$

Commercial Loans 1,500$ 100%

Agricultural Loans 2,100$ 100%

Allowance for Loan Loss (300)$ 0%

Bank Buildings 2,000$ 100%

Total 15,000$ 15,000$

Bank Assets Bank Liabilities and Equity.

Answer rating: 100% (QA)

a The bank has 400 of Tier 1 capital which is represented by common stock b The bank has 250 of Tier ... View the full answer