Suppose, a bank has assets of Rs. 10 million with a risk weight of zero. Assets of Rs. 350 million with a 0.2 risk weight, assets of Rs. 680 million…
BBS Management of Financial Institutions · 2079 · Solved Question with Answer
Suppose, a bank has assets of Rs. 10 million with a risk weight of zero. Assets of Rs. 350 million with a 0.2 risk weight, assets of Rs. 680 million with a 0.5 risk weight, and assets of Rs. 1,010 million with a risk weight of 1.00. Further, suppose that this bank reports tier-one capital of Rs. 60 million and tier-two capital of Rs. 70 million.
a. What is the total risk-weighted asset of this bank?
b. What is the tier-one capital ratio?
c. What is the tier-two capital ratio?d. What is the total capital ratio?
e. Does the bank have enough total capital? Explain why or why not.