Does this bank still meet the regulation on capital

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Reference no: EM131103588

Assets Liabilities & Capital Risk Weight for Assets

Reserves 10 Checkable Deposits 60 Reserves 0%

T-bills 5 Saving Account 97 T-bills 0%

Agence MBS 50 Capital 8 Agency MBS 20%

Loan 100 Loan 100%

Total 165 Total 165

Assume the required reserve is 10% and the capital requirement is 5%, does this bank meet the regulation on reserves and capital?

Suppose that 5% of loan is written off (loan cannot be collected). Does this bank still meet the regulation on capital?

Assume some depositors of bank A transfer $5 mil from their saving accounts to an another bank. Recommend one solution for bank A so they can comply with reserves requirement.

Reference no: EM131103588

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