What is the Tier I leverage ratio? In what capital risk category would National Bank be placed?

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
icon
Related questions
Question
  1. National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities.
    1. What is the Tier I leverage ratio?
    2. In what capital risk category would National Bank be placed?
. National Bank hasthe following balance sheet (in millions) and has no off-balance-sheet activities.
Liabilities and Equity
$ 20 Deposits
Subordinated
debentures
Assets
Cash
$ 980
Treasury bills
40
25
Residential mortgages
Common stock
45
(category 1;
loan-to-value
ratio = 70%)
Retained earnings
Total liabilities and
40
600
equity
$1,090
Business loans
430
Total assets
$1,090
Transcribed Image Text:. National Bank hasthe following balance sheet (in millions) and has no off-balance-sheet activities. Liabilities and Equity $ 20 Deposits Subordinated debentures Assets Cash $ 980 Treasury bills 40 25 Residential mortgages Common stock 45 (category 1; loan-to-value ratio = 70%) Retained earnings Total liabilities and 40 600 equity $1,090 Business loans 430 Total assets $1,090
Expert Solution
steps

Step by step

Solved in 4 steps with 2 images

Blurred answer
Knowledge Booster
Balance Sheet Regulation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education