This is what i found Answer 1
Risk-Adjusted Asset Base
The calculation of the risk-adjusted asset base for a bank is as below-
Risk-adjusted asset = (Cash × 0%) + (municipal security × 20%) + (home mortgages × 50%) + (Commercial loans × 100%)
= (20 × 0%) + (100 × 20%) + (500 × 50%) + (300$ × 100%)
= 0 + 20 + 250 + 300
= $570 million
The outcome shows that the risk-adjusted or weighted asset based for the bank will be $570 million.
Tier1 and Tier 2 Capital:
If the bank has no off-balance sheet activity then minimum required level of Tier 1 and Tier 2 capital will be-
Tier 1 capital = Risk-weighted asset × 4%
= $570 × 4%
= $22.8 million
Tier 2 capital = Maximum of 1.25% of risk-weighted asset
= $570 × 1.25%
= $7.125 million
Total capital = $22.8 + $7.125 => $29.925 million
The outcomes indicate that the minimum required level of Tier1 and Tier
2 capital is $22.8 million and $7.125 million for the bank.
Bank Comply with Capital Requirements:
If the bank has Tier 1 capital of $25 million and Tier 2 capital of $15
million then it will comply with its capital requirements of $29.925
million. It is because in this situation, total capital of bank is $37
million that is higher than the above calculated capital of $29.925
million.
Impact of off-Balance Sheet Activities on Capital Requirements
The addition of off-balance sheet activities might increase the capital
requirement of the bank. It is because an off-balance sheet items is a
financial contract that can create credit loss for the company due to
credit risk. So, in case of adding off-balance sheet activities, a bank
will require more capital to cover credit loss. Along with this, it can
also increase the minimum ratio of capital to risk-weighted assets from
8% and in that situation; the bank will need more capital (Carmichael
& Graham, 2012).
Answer 2
Probability of Repayment and Risk Premium
A).
If the rate on a one-year treasury bill is 6% and in case of loan
default, no payments are expected on financial securities then the
probability of repayment and the risk premium on 1 year AA-rated loan
yielding 9 percent will be-
Probability of Repayment:
The following formula can be useful to determine probability of repayment.
P = (1 + I) / (1 + k)
Where,
I = 6%
k = 9%
Then, ...you have $2.19 left :D
Tips are considered <u>taxable income.
</u>Although they are a bonus that you get from your customers, on top of your paycheck, you still have to pay a tax on your tips given that in America, tips are considered to be a type of income. You'd get a dividend from a company, not from customers. Gain is just another word for profit. <u>
</u>
Answer:
The answer is "$400"
Explanation:
The price value of the exercise:
= $127
The expiration date price value is:
= $135
Calculating the profit for Calls buyer:
= $135-$127
= $8
The value of 1 call = 100 shares
calculating the total profit :
=$ 8 × 100
= $ 800
One alternative purchase price:
= $12
Call option Total purchase price:
= $12 × 100
= $1200
The buyer's total loss:
= $1200 - $800
= $400
The Loss for the buyer: 
Hence profit for the writer = $400
Answer:
The present value of the dividends to be paid out over the next six years if the required rate of return is 15 percent is $6.57
Explanation:
Solution:
Given that
The present value =∑ ⁿ t=1 cf/ (1 +r)t
where cf= cash flow
r =the required rate of return
t = the number of years
Now
The present value will be:
cf₁/(1+r)^1 + cf₂/(1 +)^2 + cf₃/(1+r)3 + cf₄/(1 +r)^4) + cf₅/(1 +r)^5 + cf₆/(1+r)^6
Hence,
cf₁, cf₂ cf₃ = 0 as the firm does not expect to pay dividend in the next three years
Note: Kindly find an attached document of the part of the solution to this given question
