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University Of Cincinnati Operations And Supply Chain Management Assignment Help - Capital Equity

Question - Regulators calculate that DLC bank (see Section 2.2) will report a profit that is normally distributed with a mean of $0.6 million and a standard deviation of $2.0 million. How much equity capital in addition to that in Table 2.2 should regulators require for there to be 99.9% chance of the capital not being wiped out by losses? Table 2.2: Summary of Balance Sheet for DLC at End of 2012 ($millions) Assets: Cash 5 Marketable Securities 10 Loans 80 Fixed Assets 5 Total 100 Liabilities and Net Worth: Deposits 90 Subordinated Long-Term Debt 5 Equity Capital 5 Total 100 Table 2.3: Summary Income Statement for DLC in 2012 ($ millions) Net interest income 3.00 Loan Losses (0.80) Non-interest income 0.90 Non-interest expe ...Read More

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