Fifth Bank Has the Following Balance Sheet with Values Stated

question 121

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 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.
• E)$900.0 million.

---

Definitions:

Automatic Functions

Bodily or mental processes that operate involuntarily and without the need for conscious intervention, such as breathing or reflexes.

Brain Death

Cessation of activity of the cerebral cortex.

Cerebral Cortex

The outer layer of the brain, responsible for complex mental functions such as thinking, perceiving, producing, and understanding language.

Cerebral Cortex

The outer layer of neural tissue of the cerebrum in the brain, playing a key role in memory, attention, perception, cognition, awareness, thought, language, and consciousness.