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 %

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 %

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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Concept explainers

Balance Sheet Regulations

A balance sheet is a financial statement that shows the position of a company's assets and liabilities on a specific date. The balance sheet is prepared after preparing the statement of profit and loss statement (income statement). The balance sheet and other financial statements differ in the sense that the balance sheet shows the financial position at any given point in time. In contrast, the other financial statements show the financial performance over a particular duration.

Question

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

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