1. The amount of Exposure = $ 500m x 95% = $ 475m (& no collateral); The PD is 0.25% for AA category
The capital charge = $ 475m x 0.25% x 0.08 = $ 0.095m
2. The amount of Exposure = $ 500m (full drawn)
The PD is 32.1% for C category
Capital Charge = $ 500m x 32.1% x 0.08 = $ 12.84m
Capital Charge as stated above would not be sufficient
3. Calculation of Capital Charge (calculation in $ m)
Particulars | AA Category | BB Category |
Gross Exposure | 500 | 500 |
Less: - Collateral (haircut adjusted - 50) | 350 | 350 |
Net Exposure | 150 | 150 |
PD | 0.25% | 8.5% |
Risk weighted | 0.375 | 12.75 |
Capital Charge ratio | 0.08 | 0.08 |
Capital Charge | 0.03 | 1.02 |
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Discuss the horizontal analysis in the table below, explaining
why Cash and Cash equivalents have been twice in 2018 than 2017
despite cash from Operating Activities falling by almost one third.
And what risks for doing that?
Horizontal Analysis of Cash Flows
Note
2018
2017
Cash flows from operating activities
£m
£m
% change
Cash generated from operations
32
137.5
200.4
(31.4)
Finance income
0.1
0.1
–
Finance costs
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(11.2)
(0.9)
Tax received/(paid)
1.3
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Net cash generated...
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C-2 Levered Value
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