A bank has an adjusted amount of $536 million in high-quality liquid assets, and $425 million in adjusted potential outflows, with an additional $75 million in adjusted derivative risk. What is the bank's LCR?
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A bank has an adjusted amount of $536 million in high-quality liquid assets, and $425 million in adjusted potential outflows, with an additional $75 million in adjusted derivative risk. What is the bank's LCR?
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- Below is the balance sheet for Longhorn Bank, a private bank. As a commercial bank, Longhorn Bank faces a 10% reserve requirement. This scenario applies to the questions 34 - 38. ASSETS LIABILITIES Customer Reserves deposits $1,000,000 $150,000 Loans to households and biz $850,000The average maturity of its assets is larger than that of its deposits, as is typical of most banks. There is a (a)reinvestment risk (b)re-finance risk (c)re-pricing risk (d)default riskA Bank has the following balance sheet (in millions), with the risk weights in parentheses. In addition, the bank has $30 million in commercial direct-credit substitute standby letters of credit to a public corporation and $30 million in 10-year FX forward contracts that are in the money by $2 million. a. What are the risk-adjusted on-balance-sheet assets of the bank as defined under the Basel III? (I have this answer which should follow into question B) Cash = $19 x 0% = 0 Mortgage Loan = $65 x 50% = $32.50 Consumer Loans = $155 x 100% = $155 Therefore, the Total Risk-Adjusted On-Balance Sheet Assets is $187.50. (Unless you suggest to round to $188 for below calculations please let me know) b. What are the: Common Equity Tier I (CET1) Risk-Based Capital Ratio Tier I Risk-Based Capital Ratio The Total Risk–Based Capital Ratio? *PLEASE HELP WITH B!!! Confused with which numbers on the balance sheet to include in the Common Equity Tier 1 Capital (CET 1), Additional Tier…
- Consider a bank with the following balance sheet (Shown in image):a) Calculate the equity (total asset – total liability) to asset ratio of the bank(Hint: equity to asset ratio = total equity/total asset) b) Calculate the duration and convexity of the both asset and liability sides; c) If the interest rates go up by 1%, using the duration and convexity rule to determine the networth of the bank and the equity to asset ratio; d) In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation,the bank decides to raise cash (zero duration and zero convexity) from the equity holders.How much cash does the bank need to raise? e) Do you agree with the following statement? Explain why. “The information about a bond’s duration and convexity adjustment is sufficient to quantifyinterest rate risk exposure.”Unibank also needs to review its off-balance-sheet risk. Using the following balance sheet value of UniBank in market value terms (in millions of dollars) Assets Cash Liquid assets Loans Total assets $ 3 30 55 88 Liabilities and equity Deposits Interbank loan Equity Total liabilities and equity In addition, the bank has contingent assets with $50 million market value and contingent liabilities with $80 million market value. Why do over-the-counter contracts carry more contingent credit risk than exchange-traded contracts? $ 35 5 48 88A bank has assets of $172 billion. After applying the regulator stipulated risk weightings, the institution has total risk-weighted assets of $122.5 billion. What is the Tier 1 Capital Requirement ($million) based on Basel III requirement.
- . National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities. What is the CET1 risk-based ratio? What is the Tier I risk-based capital ratio? What is the total risk–based capital ratio?Using the image attached: a) Calculate the equity (total asset – total liability) to asset ratio of the bank(Hint: equity to asset ratio = total equity/total asset)b) Calculate the duration and convexity of the both asset and liability sides;c) If the interest rates go up by 1%, using the duration and convexity rule to determine the networth of the bank and the equity to asset ratio; d) In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation,the bank decides to raise cash (zero duration and zero convexity) from the equity holders.How much cash does the bank need to raise?e) Do you agree with the following statement? Explain why. “The information about a bond’s duration and convexity adjustment is sufficient to quantifyinterest rate risk exposure.a)Calculate the equity (total asset –total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) b)Calculate the duration and convexity of the both asset and liability sides; c)If the interest rates go up by 1%, using the duration and convexity ruleto determine the net worth of the bank and the equity to asset ratio; d)In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise? e)Do you agree with the following statement? Explain why.“The information about a bond’s duration and convexity adjustment is sufficient to quantify interest rate risk exposure.” please can you answer part d and e
- a)Calculate the equity (total asset –total liability) to asset ratio of the bank (Hint: equity to asset ratio = total equity/total asset) b)Calculate the duration and convexity of the both asset and liability sides; c)If the interest rates go up by 1%, using the duration and convexity rule to determine the net worth of the bank and the equity to asset ratio; d)In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise? e)Do you agree with the following statement? Explain why.“The information about a bond’s duration and convexity adjustment is sufficient to quantify interest rate risk exposure.”1. Suppose that a financial institution has a negative $25 million difference between its assets and liabilities. Is the institution exposed to refinancing risk or reinvestment risk and what will happen to net income if there is a rise in interest rates? 2. Suppose a financial institution has a positive $25 million difference between its assets and liabilities. Is the institution exposed to refinancing risk or reinvestment risk and what will happen to net income if there is a drop in interest rates?A bank's net interest margin represents the proportion of its investments that are financed with borrowed funds. Group of answer choices: True False