MMC Bank Has an Equity Trading Portfolio That Consists of Long

question 110

Multiple Choice

MMC Bank has an equity trading portfolio that consists of long positions of 2,750 shares of McDonald's Corp at a price of $97.50; 3,500 shares of Duke Energy at a price of $65.00; and 1,000 share of the Swiss firm USB Bancorp at a price of $47.50.In addition the bank has sold short 1,500 shares of the Japanese technology firm Sony at a price of $32.00 and 750 shares of McDonald's Corp.What is the amount of capital that MMC Bank is required to keep against this portfolio according to the Basel Standardized approach?

• A)$135,360.52
• B)$98,373.59
• C)$36,987.33
• D)$116,044.60
• E)$102,843.33

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Definitions:

Expected-Rate-Of-Return

The predicted amount of gain or loss an investment is expected to generate, expressed as a percentage.

Interest-Rate Cost-Of-Funds

The expense associated with borrowing funds, measured by the interest rate that banks or other financial institutions charge for the use of their money.

Interest-Rate Cost

The cost incurred by an individual or entity due to the interest rate applied on borrowed funds, influencing how much is paid back in interest over the loan period.

One-Time Added Profit

A temporary increase in earnings that a company experiences from a singular event or transaction, not expected to recur in the normal course of business.