$\begin{array}{lccc}
\text {Cash and Treasury securities}& \text { \$ 100 million}\
\text { FedFunds Sold }& \text { \$ 100 million}\
\text { Resiclential Mortgages 1-4 family}& \text { \$ 200 million}\
\text {Commercial Loans }& \text { \$ 600 million}\
\end{array}$
Note: The residential mortgages all have a loan-to-value of between 60 and 80 percent.
If the bank has capital of $50 million,what is the leverage ratio using the standardized approach?

Question

$\begin{array}{lccc}
  \text {Cash and Treasury securities}&  \text { \$ 100  million}\
  \text { FedFunds Sold }&  \text {  \$ 100  million}\
  \text { Resiclential Mortgages 1-4 family}&  \text {  \$ 200   million}\
  \text {Commercial Loans }&  \text {  \$ 600 million}\
\end{array}$
 Note: The residential mortgages all have a loan-to-value of between 60 and 80 percent.
If the bank has capital of $50 million,what is the leverage ratio using the standardized approach?

Quizplus · Accepted Answer

The leverage ratio is calculated as capital divided by total assets. Total assets = $100M + $100M + $200M + $600M = $1,000M. Leverage ratio = $50M / $1,000M = 5.00%.

Note: the Residential Mortgages All Have a Loan-To-Value of Between