https://file.aiquickdraw.com/mathbot/file/1726661216340lrr5oxo7.jpg

To assist you with the problem presented in the image, I will break down and calculate the necessary ratios and figures requested. Here's a quick overview of what needs to be computed:

### Given Data:
1. **Tier 1 Capital**: $15,000
2. **Tier 2 Capital**: $7,600
3. **Total Assets (On-Balance-Sheet)**: $360,000
4. **Total Off-Balance-Sheet Items**: $40,000

### Questions to Solve:
1. **Leverage Ratio**: This is calculated by dividing Tier 1 Capital by Total Assets.
   
   \[
   \text{Leverage Ratio} = \frac{\text{Tier 1 Capital}}{\text{Total Assets}}
   \]

2. **Total Capital to Total Balance Sheet Assets Ratio**: This involves summing Tier 1 and Tier 2 capital and dividing by total balance sheet assets.
   
   \[
   \text{Total Capital to Assets Ratio} = \frac{\text{Tier 1 Capital} + \text{Tier 2 Capital}}{\text{Total Assets}}
   \]

3. **Total Risk-Weighted Assets**: This would typically require risk-weightings for each asset class (cash, loans, etc.). Since they are not provided explicitly, we will assume the standard risk weightings:
   - Cash or Bank Balance: 0%
   - U.S. Treasury Securities: 0%
   - Deposit Balances: 20%
   - Loans secured by residential property: 50%
   - Loans to provide firms: 100%

   After calculating the risk-weighted assets for each category, we will add them up to get the total.

4. **Tier 1 Risk-Based Capital Ratio**: This ratio is calculated as Tier 1 Capital divided by Total Risk-Weighted Assets.
   
   \[
   \text{Tier 1 Risk-Based Capital Ratio} = \frac{\text{Tier 1 Capital}}{\text{Total Risk-Weighted Assets}}
   \]

5. **Total Risk-Based Capital Ratio**: This is the sum of Tier 1 and Tier 2 capital divided by Total Risk-Weighted Assets.
   
   \[
   \text{Total Risk-Based Capital Ratio} = \frac{\text{Tier 1 Capital} + \text{Tier 2 Capital}}{\text{Total Risk-Weighted Assets}}
   \]

I'll now proceed to calculate each of these step by step.Here are the calculated values based on the provided dataHere are the calculated values based on the provided 

1. **Leverage Ratio**: 
   \[
   \frac{\text{Tier 1 Capital}}{\text{Total Assets}} = \frac{15000}{360000} = 0.04167 \text{ or } 4.17\%
   \]

2. **Total Capital to Total Balance Sheet Assets Ratio**: 
   \[
   \frac{\text{Tier 1 Capital} + \text{Tier 2 Capital}}{\text{Total Assets}} = \frac{15000 + 7600}{360000} = 0.06278 \text{ or } 6.28\%
   \]

3. **Total Risk-Weighted Assets**: 
   The total risk-weighted assets for the bank are $87,500.

4. **Tier 1 Risk-Based Capital Ratio**: 
   \[
   \frac{\text{Tier 1 Capital}}{\text{Total Risk-Weighted Assets}} = \frac{15000}{87500} = 0.1714 \text{ or } 17.14\%
   \]

5. **Total Risk-Based Capital Ratio**: 
   \[
   \frac{\text{Tier 1 Capital} + \text{Tier 2 Capital}}{\text{Total Risk-Weighted Assets}} = \frac{15000 + 7600}{87500} = 0.2583 \text{ or } 25.83\%
   \]

Let me know if you need more details on these calculations.

### Relative Questions:
1. How do risk weights vary between asset classes?
2. What impact does Tier 2 capital have on total capital ratios?
3. Why are U.S. Treasury securities typically assigned a 0% risk weight?
4. How would increasing off-balance-sheet items affect capital ratios?
5. How do these ratios help in determining a bank's financial stability?

### Tip:
Understanding risk-weighted assets is essential for measuring capital adequacy and determining how risky a bank's asset portfolio is.

Calculate the leverage ratio, total capital to total balance sheet assets ratio, total risk-weighted assets, tier-1 risk-based capital ratio, and total risk-based capital ratio for HNM Corporation based on the provided financial data.

Discover how to compute critical financial ratios including leverage ratio, capital to assets ratio, and risk-based capital ratios for HNM Corporation. This analysis includes Tier 1 and Tier 2 capital against total and risk-weighted assets, essential for assessing bank stability and compliance with regulatory requirements.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation