A bank has $200 million in assets in the 0 percent risk-weight category.It has $400 million in assets in the 20 percent risk-weight category.It has $1,000 million in assets in the 50 percent risk-weight category and has $1,000 million in assets in the 100 percent risk-weight category.This bank has $96 million in Tier 1 capital and $48 million in Tier 2 capital.What is this bank's ratio of Tier 2 capital to risk assets?

Question

Quizplus · Accepted Answer

To calculate the ratio of Tier 2 capital to risk-weighted assets, first calculate the risk-weighted assets: (0% of $200M) + (20% of $400M) + (50% of $1,000M) + (100% of $1,000M) = $0M + $80M + $500M + $1,000M = $1,580M. The Tier 2 capital is $48M. The ratio is ($48M / $1,580M) * 100 = 3.04%.

A Bank Has $200 Million in Assets in the 0