Fifth Bank Has the Following Balance Sheet with Values Stated

question 68

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. $\begin{array}{ll}\text { Cash } & \$ 80& \text { Deposits } &\$550\\\text { Municipal General Obligation } & \$ 100 \\\text { Bonds } & \\\text { Residential Mortgages 1-4 } & \$ 220& \text { Long-Term Debt }&\$290 \\\text { family (LTV 60\%-80\%) } & \\\text { Conmercial loans } & \$ 500&\text { Equity } & \$60 \\\text { Total Assets } & \$ 900&&\$ 900\end{array}$

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 amount of risk adjusted on-balance-sheet assets of the bank as defined under the Basel II standards?

• A)$130.0 million.
• B)$685.0 million.
• C)$720.0 million.
• D)$630.0 million.

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Definitions:

Heider's Theory

A psychological theory suggesting that people tend to interpret and explain human behavior in terms of intentions and responsibilities.

Emotional Lability

A condition characterized by rapid, often unpredictable changes in emotional states, such as sudden episodes of crying or laughing.

Correspondent Inference

Causal attribution of behaviour to underlying dispositions.

Ingroup Norm

Shared expectations and rules that guide the behavior of members within their social group.