On April 2, 2020, shortly after the $7.5 million deposit outflow, Key Bank had borrowed the needed fund in the fed funds market to cover the shortfall in eserves for the remainder of the month (29 days, from 4/2 to 4/30). The required yield on a discount basis was 1.5%. On April 30, 2020, Key Bank finally received the first required payments from its mortgages, loan, and T-bills, and it also paid off its fed funds loan. Key Bank was required to establish a loan loss reserve at 0.5% of the commercial loan value and the bank was in the 35% tax bracket. The bank had not engaged in any off-balance-sheet activities. Question: What was the value of bank's risk-weighted assets (RWA) for its first month of operation? $160,773,451.60
On April 2, 2020, shortly after the $7.5 million deposit outflow, Key Bank had borrowed the needed fund in the fed funds market to cover the shortfall in eserves for the remainder of the month (29 days, from 4/2 to 4/30). The required yield on a discount basis was 1.5%. On April 30, 2020, Key Bank finally received the first required payments from its mortgages, loan, and T-bills, and it also paid off its fed funds loan. Key Bank was required to establish a loan loss reserve at 0.5% of the commercial loan value and the bank was in the 35% tax bracket. The bank had not engaged in any off-balance-sheet activities. Question: What was the value of bank's risk-weighted assets (RWA) for its first month of operation? $160,773,451.60
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:On April 2, 2020, shortly after the $7.5 million deposit outflow, Key Bank had borrowed the needed fund in the fed funds market to cover the shortfall in
reserves for the remainder of the month (29 days, from 4/2 to 4/30). The required yield on a discount basis was 1.5%.
On April 30, 2020, Key Bank finally received the first required payments from its mortgages, loan, and T-bills, and it also paid off its fed funds loan. Key Bank
was required to establish a loan loss reserve at 0.5% of the commercial loan value and the bank was in the 35% tax bracket. The bank had not engaged in any
off-balance-sheet activities.
Question: What was the value of bank's risk-weighted assets (RWA)
$160,773,451.60
O $155,932,756.48
$175,402,215.43
$130,426,340.40
its first month of operation?
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