Let's change the example of capital requirements in given Table.
Assume that Melvin's Bank holds $40 in Treasury bonds (rather than $10) and $30 in loans to other banks (rather than $10). Otherwise, Melvin's assets are the same as in the table.
a. Calculate the level of capital that Melvin must hold to satisfy (i) the minimum equity ratio and (ii) the risk-based Basel requirement.
b. Which of the two requirements is more stringent in this case? Is the answer different than it was for the original Table? If so, why?
