Exercise 1: Consider a financial institution with a mortgage pool with a total size of 200000...

a) Calculate the capital requirements.

b) Calculate the reserve requirements.

c) Calculate the deposit insurance premium.

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Expert Solution

As per given question,

mortgage pool with a total size of 200000 USD

loan to value ratio is 80 and 90 percent

So total loan value will be $ 200000 x 88/100

= $176000

Now Total capital requirement @ 8% capital requirement ratio

$14080

B) Total reserve requirement will be 10% $200000

= $20000

C) Deposit Insurance Premium- Premium you need to pay only on reserve amout

hence 0.45% of $20000

= $90

jeff jeffy answered 1 year ago

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