Fifth Bank Has the Following Balance Sheet with Values Stated

question 47

Multiple Choice

Fifth Bank has the following balance sheet with values stated in millions of dollars.All assets are associated with corporate customers (not governments or sovereigns) .Refer to Table 20-8 for associated risk weights. $$\begin{array} { | l | r | l | r | } \hline \text { Cash } & \$ 80 & \text { Deposits } & \$ 550 \\\hline \begin{array} { l } \text { Municipal General } \\\text { Obligation Bonds }\end{array} & \$ 100 & & \\\hline \begin{array} { l } \text { Residential Mortgages 1-4 family } \\\text { (LTV } 60 \% - 80 \%) \end{array} & \$ 220 & \text { Long-Term Debt } & \$ 290 \\\hline \text { Commercial loans } & \$ 500 & \text { Equity } & \$ 60 \\\hline \text { Total Assets } & \$ 900 & & \$ 900 \\\hline\end{array}$$ In addition, Fifth Bank has off-balance sheet items as follows: (Refer to Tables 20-10 and 20-11) $50 million in commercial letters of credit (LCs) ,
$300 million in 3-year interest rate swaps that are in-the-money by $2 million
$50 million in 4-year forward FX contracts that are out-of-the money by $2 million
What is the minimum Tier 1 and Total risk-based capital Fifth Bank needs in order to be considered adequately capitalized under Basel III capital requirements for both on-balance sheet and off-balance sheet items?

• A)$40.71 million; $63.0 million.
• B)$38.91 million; $51.88 million.
• C)$51.88 million; $64.85 million.
• D)$50.40 million; $67.5 million.
• E)$38.91 million; $50.40 million.

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Definitions:

Figure And Ground

A visual perception principle where the viewer automatically separates elements of an image into the 'figure', which stands out from the 'ground', or background, providing a primary focus.

Reversible Figure

A visual illusion or ambiguous image designed to be perceived in more than one way, showing different images based on the viewer's perception.

Figure-Ground Distinction

The perceptual separation of an object (the figure) from its background (the ground), a fundamental process in visual perception.

Phi Phenomenon

An optical illusion of perceiving continuous motion between separate objects viewed rapidly in succession.