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- Bank ABC has a Return on Equity (ROE) equal to 22%, a total debt ratio (debt/total assets) equal to 0.9 and an asset utilisation ratio equal to 0.05. From this we know that the profit margin of bank ABC is: (NOTE: By default, the unit of the answer is %. The answer must be input with two 2 decimal places, i.e. if the answer is 12%, please input 12.00) Answer:Following items are given for Bank of America Corp.: 1. Loans and leases outstanding 900 m 2. Total assets 1,200 m 3. Equity capital = 100 m 4. Total deposits 1,000 m 5. Nonperforming loans 50 m %3D 6. Stock price 50$ per share 7. Earnings Per Share 4$ Calculate as many of the risk measures as you can from the given data.Consider a bank with the following balance sheet (M means million): (Image attached as Q3) If the interest rates go up by 1%, using the duration and convexity rule, determine the net worth of the bank and the equity to asset ratio. ALSO In above scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise? Attempted to create formula for first part - is it correct?
- An analyst has determined that the appropriate EV/EBITDA for Rainbow Company is 9.6. The analyst has also collected the following forecasted information for Rainbow Company: EBITDA 21,520,490 = Market value of debt = 55,130,410 Cash 1,665,658 = Compute the value of equity for Rainbow Company. (Enter your answer as a number, rounded to the nearest whole number, like this: 1234) Type your answer...Consider a bank with the following balance sheet (M means million): (Image attached as Q3) If the interest rates go up by 1%, using the duration and convexity rule, determine the net worth of the bank and the equity to asset ratio. ALSO In above scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise?An individual with only $10,000 to invest is most likely better off investing in Select one: A. ETFs to increase the diversification. B. individual equities to increase portfolio efficiency. C C. individual bonds and individual equities to increase efficiency. D. mutual funds to increase the expected return. What is the correlation coefficient for two assets with a covariance of .0032, if asset 1 has a standard deviation of 12 per cent and asset 2 has a standard deviation of 9 per cent? Select one: C A. 0.3456 C B. 1.5980 C. 0.8721 D. 0.2963
- Which of the following is a financial instrument? Select one: a. All the options b. Merchant bankers c. Banks d. Mutual Fund e. Leasing Companies Find the profitability index for Oman Clothing Company if the initial investment is 10700 OMR and the cash Inflows are as follows: Year 1 =5350 OMR; Year 2 =6400 OMR; Year 3=7450 OMR and Year 4=8500 OMR. Use discount rate as 5.05%. Select one: a. 2.27 b. 1.15 c. 2.89 d. 1.41 e. None of the optionsQarshi Industries is a very well-profiled Company in financial markets of Pakistan. The company is confused about its investments during January effect. Help the company in estimating the risk and return of the company investments. For Qarshi Industries, the market and Stock J have the following probability distributions: Probability Rm Rj 0.3 15% 10% 0.4 9% 5% 0.3 8% 12% Calculate the expected rates of return for the market and Stock J. Calculate the standard deviations for the market and Stock J. Calculate the variance for the market and Stock J. Identify market anomaly, briefly discuss with example. Differentiate between Average return and Geometric return, elaborate with the mathematical description of eachWebb Bank has a composite CAMELS rating of 2, a total risk-based capital ratio of 10.2 percent, a Tier I risk-based capital ratio of 7.2 percent, a CET1 capital ratio of 6.4 percent, and a leverage ratio of 4.8 percent. What deposit insurance risk category does the bank fall into, and what is the bank's deposit insurance assessment rate? ( LG 13-4 )
- K-Life financial services Limited uses risk-adjusted return on capital (RAROC) to measure performance on several aspects. In this regard, imagine that an investment officer wants to execute a transaction with the following characteristics: Probability of default (PD) = 30 basis points Loss given default (LGD) = 55% Exposure at default (EAD) = K 1.45 million Expected loss (EL) = K 2,750 This is a loan to a company in the Agro industrial. The firm’s economic capital (EC) model is based on the 99% confidence level, with an average standard deviation of 2.15%. The risk-free rate of return is 6%. Assume that the bank has set a RAROC hurdle rate of 15% and this transaction has a net profit of K10, 500. REQUIRED: Compute the K-life’s risk-adjusted rate of return on this transaction. Now assume that K-life could also have made a loan for the same amount to a firm in the service industry, and that the standard deviation for economic capital purposes in this case is 1.29%. Compute the bank’s…(Capital asset pricing model) Grace Corporation is considering the following investments. The current rate on Treasury bills is 2.5 percent and the expected return for the market is 9 percent. Stock Beta K 1.06 G 1.28 B 0.78 U 0.93 (Click on the icon in order to copy its contents into a spreadsheet.) a. Using the CAPM, what rates of return should Grace require for each individual security? b. How would your evaluation of the expected rates of return for Grace change if the risk-free rate were to rise to 4 percent and the market risk premium were to be only 6 percent? c. Which market risk premium scenario (from part a or b) best fits a recessionary environment? A period of economic expansion? Explain your response. Question content area bottom Part 1 a. The expected rate of return for security K, which has a beta of 1.06, is enter your response here%. (Round to two decimal places.) Part 2 The expected rate…(a) A financial analyst would like to study the stock market in Hong Kong. It is believed that the stock market will become overvalue when one of the indicato Time left 1:5 price/earning (P/E) ratio is over 33.9. On this basis, he finds out 30 companies and records their P/E ratio as below: Round the data down to an integer (e.g., 29.7 will be 29) and then prepare a stem-and-leaf display for the rounded data. [Do not put space between digits (e.g., put 1123 instead of 1 1 2 3).] Stem Leaf 0 1 2 3 4 51.7 46.5 40.9 4.2 56.8 38.9 46.7 2.5 49.9 44.6 46.5 12.3 23.8 44.0 47.2 47.2 58.2 17.1 56.4 52.7 43.0 48.7 38.1 54.5 43.8 40.9 41.9 52.5 32.9 13.142.7 33.1 5