Onshore Bank has $32 million in assets, with risk-weighted assets of $22 million. Core Equity Tier 1 (CET1) capital is $1,000,000,additional Tier I capital is $340,000, and Tier II capital is $424,000. The current value of the CET1 ratio is 4.55 percent, the Tier I ratio is6.09 percent, and the total capital ratio is 8.02 percent.Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions.a. The bank repurchases $112,000 of common stock with cash.b. The bank issues $3.2 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 80percent.c. The bank receives $512,000 in deposits and invests them in T-bills.d. The bank issues $812,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ creditrating.e. The bank issues $2.2 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.f. Homeowners pay back $5.2 million of mortgages with loan-to-value ratios of 40 percent and the bank uses the proceeds to buildnew ATMs.Complete this question by entering your answers in the tabs below.X Answer is complete but not entirely correct.Required A Required B Required CCET1 ratioTier I ratioTotal capitalratioThe bank issues $3.2 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of80 percent. (Round your percentage answers to 2 decimal places. (e.g., 32.16))4.07 X %5.46 X %7.18 X %Required D Required E Required Fleprsen

In a stock repurchase, sometimes referred to as a share buyback, a business purchases its own shares…

Answered: Onshore Bank has $32 million in assets,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Onshore Bank has $39 million in assets, with risk-adjusted assets of $29 million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I capital is $550,000, and Tier Il capital is $438,000. The current value of the CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital ratio is 8.06 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank issues $2.9 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds. % % % CET1 ratio Tier I ratio Total capital ratio
A bank has $217 million in assets in the 0 percent risk-weight category. It has $223 million in assets in the 20 percent risk-weight category. It has $189 million in assets in the 50 percent risk-weight category and has $29 million in assets in the 100 percent risk-weight category. This bank has $28 million in Tier 1 capital and $56 million in Tier 2 capital. What is this bank's ratio of Tier 1 capital to total assets? Type your answer as percentage and not as decimal (i.e. 5.2 and not 0.052). Round to the nearest two decimals if needed. Do not type the % symbol.
The assets of a bank consist of $300 million of loans to A-rated corporations with the principals being repayable at maturity. The Probability of Default for the corporation is estimated as 0.4% per year. The loan maturities are three years and the LGD is 45%. 1. What is the total risk-weighted assets for credit risk under the Basel II advanced IRB approach? 2. How much Tier 1 and Tier 2 capital is required?
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?
Ivanhoe Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: current ratio = current assets/current liabilities. The firm's current assets are equal to $1,236,000, its accounts payable are $422,000, and its notes payable are $350,000. Its inventory is currently at $ 724,000. The company plans to raise funds in the shot - term debt market and invest the entire amount in additional inventory. How much can notes payable increase without the current ratio falling below 1.50?
Given the information below. Find the Weighted Average Cost of Capital Market Value of Equity = $22,000,000; Debt = $15,000,000; Cash or Cash Equivalents = $15,000,000 iD = 0.10 or 10% iMKT = 0.17 or 17% tCorp = 0.30 or 30% bK = 1.5 IRF = 0.02 = 2%
Suppose that the assets of a bank consists of $100 million of loans to A rated corporations. The PD for the corporations is estimated as 0,1% and LGD is 60%. The average maturity is 2.5 years for corporate loans. What is RWA?.
Star Bank has estimated that its average VAR over the last 60 days was £35.5 million. The DEAR of the previous day was £30.2 million. Under the latest BIS standards. a) Determine the amount of capital to be held for market risk. b) The bank has £15 million of Tier 1 capital, £37.5 million of Tier 2 capital and £54 million of Tier 3 capital. Is the capital sufficient? If not, what minimum amount and type of new capital should be raised? (Note that capital can be raised from any type subject to Tier 3 capital is limited to 250% of Tier 1 and Tier 2 can be substituted for Tier 3 up to the same 250% limit.) Solution a) £106.5m b) £4.71m
Suppose Bank A has $35 million in rate-sensitive assets, $70 million in fixed rate assets, $70 million in rate sensitive liabilities, and $35 million in fixed rate liabilities and equity capital. Calculate the change in Bank A’s profit as a result of an increase in market interest rates of 2 percentage points.
Star Bank has the following asset portfolio on its balance sheet (and zero off-balance-sheet business). ASSETS Cash $100 Municipal Bonds $150 Residential Mortgages $250 Commercial Loans $500 $100 $1,100 Junk Bonds Total Assets VALUE CREDIT ($million) RISK WEIGHT 0% 20% 35% 100% 150% Star Bank has $57 million in Common Equity Tier 1 (CET1) capital. What is the bank's CET1 risk-based capital ratio (assuming there is no market risk or operational risk)? Select one: a. 8.2 percent O b. 7.43 percent O c. 5.7 percent O d. 5.18 percent
To assist with evaluating potential capital projects, Carrium Insights Inc. is seeking to determine its actual Weighted Average Cost of Capital (WACC). Utilising information from the financial statements, together with current information, the Finance Manager has compiled the following information as it pertains to the company’s capital structure: Debt: Bonds outstanding has a face value of $568,000,currently selling at 95% of par. These bonds have 20 years left to maturityandacoupon rate of 7.55%.(Hint: you can use the lowest multiple of $1,000 for the YTM calculation only) Common stock: 21,000 shares of common stock outstanding with a market price of $63.00.The company just paida dividend of $6.00; for ease of computation, dividends are expected to grow by 5% annually. Preferred stock:The company intends to offer 15,000 shares of preferred stock to the public at a price of $25.00 per share. The intention is to pay an annual dividend of $3.00. Additional Information: ✓The Company’s…
For a particular firm, the purchasers of common stock require an 11% rate of return, bonds are sold at a 7% interest rate, and bank loans are available at 9%. Compute the cost of capital or WACC for the following capital structure

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