Suppose ABC commercial bank has assets of Rs. 20 million with a risk weight of zero, assets of Rs. 250 million with a 0.2 risk weight, assets of Rs.…
BBS Management of Financial Institutions · 2078 · Solved Question with Answer
Suppose ABC commercial bank has assets of Rs. 20 million with a risk weight of zero, assets of Rs. 250 million with a 0.2 risk weight, assets of Rs. 870 million with a 0.5 risk weight and assets of Rs. 950 million with a risk weight of 1. Further suppose that this bank reports tire-one capital of Rs. 250 million and tire-two capital of Rs. 80 million.
a. What is the total risk weighted assets of this bank?
b. What is the tire-one capital ratio?
c. What is the tire-two capital ratio?
d. What is the total capital ratio?
e. Do you think that the bank has proper capital ratio as per demanded by NRB. Explain.