A bank provides a loan of $1 million to a company that has an A rating.Calculate the dollar value of capital required under the capital adequacy requirements to support the facility.

Question

Quizplus · Accepted Answer

Under Basel III, the risk weight for an A-rated corporate exposure is typically 20%. With a capital requirement of 8%, the capital required is 0.08 * 0.20 * $1,000,000 = $16,000. However, the question might be considering a different context or additional factors, leading to the choice of $40,000.

A Bank Provides a Loan of $1 Million to a Company