A bank has the following balance sheet:AssetsLiabilitiesCash 100Deposits 600Government bonds 100Long term debt 185Secured mortgages 200Common Equity 15Commercial loans 400All questions are for Basel U.a) Calculate risk weighted assets.b) Does the bank satisfy capital requirements underBasel I? If the bank does not satisfy the requirement,what should it do? Give two examples and show yourcalculations.

a) Assets Risk weight % Cash 100 0 0 Government bonds 100 0 0 Secured mortgages 200 0 0…

a) Calculate risk weighted assets. b) Does the bank satisfy capital requirements under Basel I? If the bank does not satisfy the requirement, what should it do? Give two examples and show your calculations.

a) Calculate risk weighted assets. b) Does the bank satisfy capital requirements under Basel I? If the bank does not satisfy the requirement, what should it do? Give two examples and show your calculations.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 1bM

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Question

100%

A bank has the following balance sheet:
Assets
Liabilities
Cash 100
Deposits 600
Government bonds 100
Long term debt 185
Secured mortgages 200
Common Equity 15
Commercial loans 400
All questions are for Basel U.
a) Calculate risk weighted assets.
b) Does the bank satisfy capital requirements under
Basel I? If the bank does not satisfy the requirement,
what should it do? Give two examples and show your
calculations.

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