FRM Part I · FRM Exam Part I · Banks
A bank has CET1 capital of $50 million, Additional Tier 1 capital of $10 million and Tier 2 capital of $20 million. Its RWA is $800 million. What are its Tier 1 ratio and total capital ratio, respectively?
Tier 1 capital is CET1 plus Additional Tier 1, so 60 million, giving 7.5% of 800 million RWA. Total capital adds Tier 2 for 80 million, giving 10.0%. The answer is 7.50% and 10.00%.
- A6.25% and 8.75%
- B7.50% and 10.00%Correct
- C7.50% and 8.75%
- D6.25% and 10.00%
Explanation
Tier 1 capital = 50 + 10 = 60; 60/800 = 7.50%. Total capital = 60 + 20 = 80; 80/800 = 10.00%. Option 6.25% uses CET1 only as Tier 1, a missed adjustment for AT1.
Did you get it right without looking?
One question tells you little. A timed set on Banks shows your real accuracy, how long you take and where you lose marks.
More Banks questions
- A bank has HQLA of USD 18 billion. Over the next 30 days under the stress scenario, it projects total cash outflows of USD 30 billion and to…
- Under the originate-to-distribute (OTD) model, a bank makes loans and then sells them to a special purpose vehicle that issues securities. W…
- A bank's balance sheet shows available stable funding (ASF) of USD 96 billion after applying ASF factors. Required stable funding (RSF) is c…
- Under the originate-to-distribute (OTD) model, a bank makes loans and then sells them to investors, typically through securitization. Which …
- A bank has Tier 1 capital of $45 million and total leverage exposure of $1,500 million. Its RWA is $600 million. The regulator requires a mi…
- Under the originate-to-distribute model, a bank makes loans and then securitizes and sells them. Compared with the traditional originate-and…