Calculate the bank capital excess or deficiency

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Reference no: EM132969769

Here is Simple Bank's balance sheet (with associated interest rates):

Assets

$200 million Corporate Bonds, 4.25%

$800 million Business Loans, 7.5%

$25 million Reserves, Fed pays 0.5%

$10 million Real Assets

Liabilities

$550 million Demand Deposits

$360 million Time Deposits, 2.5%

$25 million Preferred Shares, 3.3%

$100 million Common Shares

Problem A) Calculate the bank's Net Interest Margin, nothing that dividends on preferred shares are not included (because they are not interest)

Problem B) If capital requirements are 8% for loans and 6% for bonds, calculate the bank's capital excess or deficiency.

Reference no: EM132969769

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