A. Discuss what could happen if GBC Financial Holdings PLC fails to meet these new requirements. Analyze what GBC Financial Holdings PLC might do to comply with the Basel IIl standards Asset Amount Cash and equivalents $5,000,000 $1,500,000,000 $100,000,000 $2,000,000,000 Government securities Interbank loans Mortgage loans Ordinary loans $300,000,000 $550,000,000 Standby letters of credit $81,000,000 BBB+ - BBB- AAA - AA-
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- Suppose that the assets of a bank consist of $100 million of loans of BBB-rated corporations. The PD for the corporations is estimated as 1%. The average maturity is five years and the LGD is 60%. What is the total risk-weighted assets for credit risk under the Basel II advanced IRB approach? Question 5Answer a. $178.1 million b. $13.2 million c. $165.4 million d. $100 millionWhat is the contribution to the asset base of the following items under the Basel III requirements? $40 million repurchase agreements (against U.S. Treasuries). $2 million loan to foreign bank, OECD rated 3. $500 million 1–4 family home mortgages, category 1, loan-to-value ratio 80 percent.q11 Which of the following is an arrangement by which one party promises to pay a sum of money to policyholder as protection against an adverse or unfavorable occurrence of event? a. Short Term Loans b. Fixed Deposit c. Insurance d. Investment q12 Insurance companies and brokerage houses are examples of which of the following. a. Financial instruments b. Financial institutions c. Medium of exchange d. Financial markets
- It is the policy of the corporation to maintain current ratio of 1.5 to 1.0. Its current liabilities are 400,000 and present current ratio is 2 to 1. How much is the maximum level of new short term loans it can secure without violating the policy? a• 400,000 b• 533,333 c• 200,000 d• 300,000Apply derecognition criteria of U.S. GAAP to Company B’s situation below: Company B sells a portfolio of 100 short-term receivables to a bank for cash by guaranteeing to buy back first 20 defaulted receivables at the amount due from the debtors. The historical default rates on such receivables are up to 10%. The customers are notified of the sale and pay directly to the bank. The bank may subsequently sell or pledge these receivables. Under U.S. GAAP, should Company B derecognize this portfolio of short-term receivables? Why?Consider an FI with the following off-balance-sheet items: A two-year loan commitment with a face value of $120 million, a standby letter of credit with a face value of $20 million and trade-related letters of credit with a face value of $70 million. All counterparties have a credit rating of BBB. What is the total capital amount the FI needs to hold against these exposures? (Assume data obtained from 2020 FI records) Select one: A. $5.04 million B. $9.87 million C. $8.4 million D. $7.52 million
- What is the contribution to the asset base of the following items under the Basel III requirements? $10 million 1–4 family home mortgages, category 2, loan-to-value ratio 95 percent. $5 million 1–4 family home mortgages, 100 days past due. $500 million commercial and industrial loans, AAA rated.What is the amount received by partially secured creditor? A. P40,000B. P60,000C. P70,000D. P65,000In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. Bank A Cash Reserves for Deposit ? Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 If Cash Reserves for deposit is at least 8% of the deposit under the Basel Accord, how much of the G-Bond Bank A should purchase? $17 $14 $16 $18 $20 $15 $19 $21
- Suppose that a bank does the following: a. Sets a loan rate on a prospective loan with BR = 4.23% and ϕ = 3.16%. b. Charges a 0.33 percent loan origination fee to the borrower. c. Imposes a 9 percent compensating balance requirement to be held as noninterest-bearing demand deposits. d. Holds reserve requirements of 8 percent imposed by the Federal Reserve on the bank’s demand deposits. Calculate the bank’s ROA on this loan.Apply derecognition criteria of IFRS 9 and U.S. GAAP to Company B’s situation below: Company B sells a portfolio of 100 short-term receivables to a bank for cash by guaranteeing to buy back first 20 defaulted receivables at the amount due from the debtors. The historical default rates on such receivables are up to 10%. The customers are notified of the sale and pay directly to the bank. The bank may subsequently sell or pledge these receivables. Under IFRS, should Company B derecognize this portfolio of short-term receivables? Why? Under U.S. GAAP, should Company B derecognize this portfolio of short-term receivables? Why?A bank has assets of $172 billion. After applying the regulator stipulated risk weightings, the institution has total risk-weighted assets of $122.5 billion. What is the Tier 1 Capital Requirement ($million) based on Basel III requirement.