$\begin{array}{c}
\begin{array}{lll}
\text {Cash and Treasury securities}\
\text {Fed Funds Sold}\
\text {Residential Mortgages 1-4 family}\
\text {Commercial Loans}
\end{array}
\begin{array}{lll}
\text { \$ 100 million}\
\text {\$ 100 million}\
\text { \$ 200 million}\
\text {\$ 600 million}
\end{array}
\end{array}$
Note: The residential mortgages all have a loan-to-value of between 60 and 80 percent.
-What is the ratio of capital to risk-adjusted assets, if the bank has capital of $50 million?

Question

$\begin{array}{c}
\begin{array}{lll}
 \text {Cash and Treasury securities}\
 \text {Fed Funds Sold}\
 \text {Residential Mortgages 1-4 family}\
 \text {Commercial Loans}
\end{array}
\begin{array}{lll}
 \text { \$ 100 million}\
  \text {\$ 100 million}\
 \text { \$ 200  million}\
 \text {\$ 600  million}
\end{array}
\end{array}$
 Note: The residential mortgages all have a loan-to-value of between 60 and 80 percent.
-What is the ratio of capital to risk-adjusted assets, if the bank has capital of $50 million?

Quizplus · Accepted Answer

The risk-adjusted assets are calculated by applying risk weights: Cash and Treasury securities (0%), Fed Funds Sold (20%), Residential Mortgages (50%), and Commercial Loans (100%). The total risk-adjusted assets are $500 million. The capital to risk-adjusted assets ratio is $50 million / $720 million = 6.94%.

Note: the Residential Mortgages All Have a Loan-To-Value of Between