A bank has 100 in assets and 60 in liabilities. Suppose assets pay on average 6% and liabilities cost 2%. What is the expected rate of return on capital? A. 4% B. 12% C. 8% D. -4%
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- Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital expenditures of $112,900, cash dividends of $35,800, and average maturities of long-term debt over the next 5 years of $122,300. What is Chasses free cash flow and cash flow adequacy ratio? a. $94,300 and 0.77, respectively c. $130,100 and 1.06, respectively b. $94,300 and 0.82, respectively d. $165,900 and 1.36, respectivelyA bank with $10,000 in assets has ROA =2% and ROE - 10%. What is its leverage ratio (TA/Equity)? A 2.5 B 5 C 4 D 1.25a)Assume that the following data is extracted from the financial statements of Richy-Rich bank: equity is $350 million, interest expense is $115 million, provision for loan loss (P) is $35 million, noninterest income is $30 million, noninterest expense is $50 million and a tax rate is 33%. What is the minimum total interest income required to give a return on equity (ROE) of 20%? Show workings when necessary. b) Be-smart Bank reported an equity multipler ratio of 6.5 at the end of year 2021. If the bank’s total debt at the end of year 2021 was $5 million, how much of its assets were financed with equity? Show calculations when necessary. c) What are the main sources of funding for commercial banks? Using bullet points, classify these sources and briefly describe each category.
- 1 If Net Income is $15,000 and Total Assets are $100,000, for every $1 in assets, how much net profit should the bank have? 2 If Net Income is $10,000 and Total Equity Capital (Bank Capital) is $40,000, for every $1 in equity what is the shareholder’s return?Suppose Bank A has $35 million in rate-sensitive assets, $70 million in fixed rate assets, $70 million in rate sensitive liabilities, and $35 million in fixed rate liabilities and equity capital. Calculate the change in Bank A’s profit as a result of an increase in market interest rates of 2 percentage points.The First National Bank of Trinidad reports a net interest margin of 5.83 percent. It has totalinterest revenues of $275 million and total interest expenses of $210 million. What will be thebank's earning assets total?A. $4,717 millionB. $3,602 millionC. $1,115 millionD. $3,790 million
- Suppose an SEVP tells you that last year a bank had total interest expenses on all borrowings of BDT 12 million and noninterest expenses of BDT 5 million, while interest income from earning assets totaled BDT 16 million and noninterest revenues totaled BDT 2 million. Suppose further that assets amounted to BDT 480 million, of which earning assets represented 85 percent of that total asset while total interest-bearing liabilities amounted to 75 percent of total assets. See if you can determine the bank’s net interest and non-interest margins and its earnings base and earnings spread for the most recent year.Consider a bank with return on assets of .15 or 15%. The equity multiplier for this bank is 1.333. What is the return on equity of this bank?First National Bank has a debt-to-equity ratio of 3. Its weighted average cost of capitalis 12.50% and its cost of debt is 8%. First National Bank is subject to a 25% corporatetax rate.a. What is First National Bank cost of equity?b. What is First National Bank un-levered cost of capital?c. What would be its weighted average cost of capital is debt equity ratio is 0.5? 4? please provide step by step
- ) Prince Edward Bank considers increasing a type of loans in the credit portfolio by $3,500,000,which will generate a gross income of 2.5%p.a. The bank assumes PD is 10% and estimates LGDis 20% and EAD as 80%. The net income, which is gross income minus Expected Loss (i.e. EL),will be used in the RAROC analysis. When doing so, the Bank refers to the net income andunexpected loss (i.e. UL) as the capital-as-risk estimation.Required:If the ROE of Prince Edward Bank is targeted at 25%, analyze whether the loans could be addedto the portfolio by RARoC analysisA bank has earning assets of $100 million including $30 million of securities that pay an interest rate of 3%, and $70 million of loans that pay an interest rate of 6% financed by $100 million of deposits paying an interest rate of 3%. What is the bank's Net Interest Margin (NIM)?A bank has capital of $200 and a leverage ratio of 5.If the value of the bank's assets declines by 10percent,then its capital will be reduced toa.$100b.$150c.$180d.$185
