Sigma Bank Has the Following Balance Sheet in Millions of Dollars

question 36

Multiple Choice

Sigma Bank has the following balance sheet in millions of dollars. Unless mentioned otherwise, all assets are associated with corporate customers (not governments or sovereigns) . Values are in millions of dollars. Refer to table 20-8 for appropriate risk weights $$\begin{array} { | l | r | l | r | } \hline \text { Cash } & \$ 40 & \text { Deposits } & \$ 370 \\\hline \begin{array} { l } \text { Municipal General } \\\text { Obligation Bonds }\end{array} & \$ 60 & & \\\hline \begin{array} { l } \text { Residential Mortgages } \\\text { l-4 family } \\( 80 \% - 90 \% \text { LTV) }\end{array} & \$ 100 & \begin{array} { l } \text { Perpetual Preferred } \\\text { Stock }\end{array} & \$ 20 \\\hline \begin{array} { l } \text { Commercial loans } \\\text { BB + rated }\end{array} & \$ 200 & \text { Equity } & \$ 10 \\\hline \text { Total Assets } & \$ 400 & & \$ 400 \\\hline\end{array}$$ Off balance sheet contingent liabilities (Refer to Table 20-10)
$40 million direct-credit substitute standby letters of credit issued to a U.S. corporation.
$40 million commercial letters of credit issued to a corporation
Off-balance sheet derivatives (Refer to Table 20-11)
$200 million 10-year interest rate swaps
$100 million 2-year forward DM contracts
-What is the credit equivalent amount of the off-balance-sheet foreign exchange contracts if it is out-of-the-money by $4 million?

• A)$1.0 million.
• B)$2.0 million.
• C)$5.0 million.
• D)$6.0 million.
• E)$9.0 million.

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Definitions:

Medical Expenses

Costs related to healthcare, including treatments, surgeries, and preventive services, which may be deductible under certain tax conditions.

Itemized Deductions

Specific expenses that taxpayers can claim to reduce their taxable income, as opposed to taking the standard deduction.

Charitable Contributions

Donations or gifts given by individuals or organizations to non-profit organizations, which can often be deducted from taxes.

AGI Limitation

Restrictions or phase-outs on certain tax deductions, credits, or exemptions based on the taxpayer's Adjusted Gross Income (AGI).