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RSK4805 Assignment 3 (DETAILED ANSWERS) 2024 - DISTINCTION GUARANTEED $2.84   Add to cart

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RSK4805 Assignment 3 (DETAILED ANSWERS) 2024 - DISTINCTION GUARANTEED

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RSK4805 Assignment 3 (DETAILED ANSWERS) 2024 - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED Answers, guidelines, workings and references .. Question 1 (25 marks) 1.1 A bank estimates that its profit next year is normally distributed with a mean of 0.8% of assets and a s...

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  • August 8, 2024
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RSK4805
Assignment 3 2024
Unique #:
Due Date: 15 August 2024



Detailed solutions, explanations, workings
and references.

+27 81 278 3372

, QUESTION 1

1.1.

To be 99% sure that the bank will have positive equity at the end of the year, we
need to find the value X where the profit plus equity is greater than zero, given the
normal distribution parameters.

Mean=0.8%

Standard deviation=2%

The z-value for 99% confidence is 2.33.

X=Mean+(z × Standard deviation)

X=0.8%+(2.33×2%)

X=0.8%+4.66%

X=5.46%

Therefore, the bank needs 5.46% equity as a percentage of assets to be 99% sure
it will have positive equity at the end of the year.



1.2.




Step-by-Step Calculation




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