Suppose that a bank has $30 million in asset X,$10 million in asset Y,and $20 million in asset Z.Each asset has a different risk weight.The risk weight for asset X is 30%,the risk weight for asset Y is 60%,and the risk weight for asset Z is 10%.The amount of risk-weighted assets for this bank is ____________ million.Assuming that the bank has to hold capital equal to 8% of its risk-weighted assets,the bank must hold _____________ million in capital.

Question

Quizplus · Accepted Answer

The risk-weighted assets can be calculated as follows:
$30 million × 30% + $10 million × 60% + $20 million × 10% = $9 million + $6 million + $2 million = $17 million
Therefore, the bank must hold capital equal to 8% of its risk-weighted assets:
8% × $17 million = $1.36 million
So, the correct answer is C) $17; $1.36.

Suppose That a Bank Has $30 Million in Asset X,$10