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
Answer:
True
Explanation:
Critical-Chain
This was introduced or originated by Eli Goldratt in 1997. Its aim is to challenges conventional project management approaches and absolute dependence on TOC principles. The idea of what to change or eliminated is the largely rooted behaviors that is common with the traditional project management practices. It is very multitasking anf it is the longest string of reliance that occur on the project.
Critical- Chain Approach
This approach simply covers project network as it ca be limited by both resource and technical reliance/dependencies. each type of limitations can create task reliance.
The Summary of Critical Chain Approach
1.) use Aggressive but Possible Times (ABPT) for task durations
2.) identify the critical chain by accounting for resource dependencies
3.) use buffer management to track project progress etc.
Answer:
the cash payback period is 6.09 years
Explanation:
The computation of the cash payback period is shown below:
= Initial Investment ÷ Net annual cash inflow
= $1,400,000 ÷ $230,000
= 6.09
Now the net annual cash flow is
.
Net operating income $90,000.00
Add: Depreciation $140,000.00
Net annual cash inflow $230,000.00
Hence, the cash payback period is 6.09 years
Answer:
An optional Call
Explanation:
Callable Bond
Callable bond represents an instrument of debt where the issuer issues the instrument reserving the right to make a return of the principal of investors including the stoppage of interest payments before the date of maturity of the bond.
Organisations would usually issue bonds as callable when either to meet unexpected obligations like pay off other debts, fund expansions or when they sense that opportunities may arise in the future for them to get other forms of financing at lower interest rates.
For bonds to be callable the terms must be clearly stated in the bond's offering.
Optional Call
In optional call, the issuer reserves the right to call the bonds to take advantage of present circumstances such as significant drop in interest rates (as stated in the question). However, the terms detailed in the bond resolution will allow the bondholders to receive a premium to par as compensation for their loss of interest payments on the called bond.
Furthermore, a period of time must usually pass before the issuer can use the optional call.
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