Note that you can, and may have to, calculate anything marked with a \"???,\" an

Question

Note that you can, and may have to, calculate anything marked with a "???," and anything not included or otherwise calculable = $0.

Additional information

No loans are currently charged off, but 20% of residential mortgage (home) loans are nonperforming.

Use the reserve requirement ratio we've used in all graded assignments. (10%)

Interest income = $240

Income from non-interest sources (letters of credit, fees) = $20

Interest expense = $50

Non-interest expense (wages and salaries) = $80

All borrowings, and half of the loans to business firms, will be repriced in the next month.

Economists expect interest rates to rise in the near future.

Calculate the risk-adjusted leverage ratio for this bank. Express your answer "as a percent, but without the percentage sign." Carefully follow all numeric instructions.

Assets Liabilities and Owner's Equity Buildings and furniture $900
Cash $80
Commercial paper $500
Deposit in the Fed $320
Government agency bonds $800
Home mortgages $1200
Loan to Bank A $400
Loans to firms $1100
Loans to households $1300
Municipal bonds $1400
US government bonds $600 Checking deposits $2100
Savings deposits $800
Time deposits $200
Borrowing from Bank B $500
Borrowing from the Fed $1600
Other liabilities $1000
Equity $???



Total assets = $8600 Total liabilities and owner's equity = ???

Explanation / Answer

Assets Amount liabilities and owners equity Amount building and furniture $900 checking deposits 2100 cash $80 savings deposits 800 Commercial paper $500 time deposits 200 Deposit in the FED $320 borrowing from bank B 500 Government agency bonds $800 borrowing from fed 1600 Home mortgages $1,200 other liabilities 1000 loan to bank $400 Equity 2400 loans to firms $1,100 loans to households $1,300 municipal bonds $1,400 us governement bonds $600 $8,600 8600 Calculate the risk-adjusted leverage ratio for this bank. equity+retained earnings-goodwill/Average consolidated Assets (2400+0-0)/8600 0.27907 *retained earnings and goodwill are not available, hence assumed zero *Total Assets are considered as avearge consolidated assets.

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