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QUESTION 5
-
A bank with $10,000 in assets has
ROA =2% andROE =10%. What is its leverage ratio (TA/Equity)?2.5
5
4
1.25
QUESTION 6
-
The expected loss of a loan is a function of the following, except
Unexpected loss
Loss given default
Exposure at default
Probability of default
-
Step by step
Solved in 3 steps with 2 images
- Use Table 9. Assume there is a loan loss of $4. What is the old and new capital ratio? Reserves Loans 17.65%, 11,46% O 17.65%, 12.94% 15.00 %, 11.00% O 15.00 %, 11.46% Table 9 10 90 Deposits Capital 85 15QUESTION 7 Given the following information, what is expected loss of a $200,000 loan in percent? Probability of default 0.30% Loss given default 55.00% .15% .22% .33% .17% QUESTION 8 A bank reviewed over 800 automobile loans belonging to risk category 3 borrowers. If the bank uses a confidence level of 99.25%, what is the economic capital or loan at risk of a $200,000 loan? The historical losses in ascending order is as follows: Loan 1 0 2 0…A e N Y ll 36% Ô 14:24 Vo) LTE Question 4/10 Using the examples from the videos, which of these types of loans require that some principal be repaid prior to maturity (i.e., before the end of the loan period)? (check all that apply) Mortgage loan Bank loan Capital lease Zero-coupon bond Coupon bond NEXT
- Calculate the interest rate using following information (Enter your answer in percentage. Round your answer to 2 decimal places): Administrative costs Cost of debt Cost of equity Probability of loss The average reserve requirement Capital policy 2% 4% 5% 0.65% 5% 90% debt capital, 10% equity capital 2Consider the following balance sheet Expected Balance Sheet for XYZ Bank Assets Yield Liabilities Cost Rate sensitive $ 1300 8% %$4 1700 8% Fixed rate $500 9% $1500 5% Non earning $ 5100 $. 1800 Equity 1900 Total $ 6900 $6900 What is the Net Interest Margin (NIM)5. Use MV = P(1 + RT) to find the maturity value (in $) of the loan. Principal Rate (%) Time Maturity Value $15,660 11 1 2 42 months $
- CENGAGE MINDTAP Ch 07: Assignment - Using Consumer Loans 12. Buy on time or pay cash? You are going to make a substantial purchase. You have enough money to pay cash, but don't know if that's the way to make best use of your assets. Maybe you should take out an installment loan to make the purchase and invest the cash you would otherwise have used to pay for it. Use the information provided to complete the following worksheet and analyze how the numbers work out most favorably for you. For simplicity, compounding is ignored in calculating both the cost of interest and interest earnings. [Note: Enter your dollar answers rounded to the nearest two cents and precede numbers that are less than zero (0) with a minus sign (-).] Q Search this course ? Khloe ✓ A-ZPart AUsing the following free cash flows and cost of equity = 7%, discount FCF year 1 back to time 0 (today). FCF year 1 = 500; FCF year 2 = 520; FCF year 3 = 560; FCF year 4 = 590; FCF year 5 = 610 a) 429.36 b) 467.29 c) 512.85 d) 422.10Part B Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, discount the year 4 expected payment back to time 0 (today). Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 a) 9.31 b) 10.11 c) 13.65 d) 6.50Question 2 Instead of 1 loan been disbursed, assumed a portfolio of loans been disbursed with % distribution of tenure (on amount), interest rate and overall disbursal as follows Overall portfolio disbursal Annualized Interest rate Monthly interest rate Assume all loans are disbursed at the above interest rate only, interest is applied monthly on declining balance method (same as in question 1) Tenure % Distribution 5.00% 1 2 5.00% 3 10.00% 2.00% 5.00% 25.00% 2.00% 2.00% 15.00% 2.00% 2.00% 25.00% 4 5 6 7 8 9 10 11 12 Answer the following question (complete the empty table) Sl.no 1 2 3 4 1,00,000 15% 1.25% Disribution Amount Balance outstanding at start of period 1,00,000 5000 5000 10000 2000 5000 25000 2000 2000 15000 2000 2000 25000 1 what will be the balance outstanding of the whole portfolio at the end of every month 2 What is the payment received every month What is the principal paid and interest paid every month Payment received (EMI amount) Principal paid Interest paid Balance…
- Toms UI IVesuTment to ychciut ed as a cost of borrowing to compensate the opportunity costs of the bank with I to the cash loaned to you. Moreover, the interest rate is usually expressed as nual percentage rate. activity ctions: On the space provided, write TRUE if the idea being expressed is correct and FALSE if otherwise. 1. In the most loan amortization schedules, amortization of discount or premium of the loan increases over time. 2. The process of obtaining future values is called discounting. 3. An annuity in which cash flows occur at the end of each period is called annuity. age7 lender appraised value : $8,400,000 cash flow :$444,000 Using Information Above what would be the loan amount assuming a 75% loan-to-value and a 9% debt yield? Round to nearest dollar.Treasury bills _____. a. are sold for exactly $10,000 b. pay no explicit interest c. are quoted in terms of yield to maturity d. have a stated interest rate