Explanation:
Under Basel III, the minimum leverage ratio requirement is 3%.
The leverage ratio is calculated as Tier 1 Capital divided by Total Exposure (including both on-balance sheet and off-balance sheet exposures). A ratio of 3.45% means the bank has adequate capital relative to its total exposure and comfortably meets the Basel III minimum requirement of 3%.
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With respect to the Basel III accord, what is ABC Bank's current leverage ratio and does it satisfy the minimum requirement?
A
2.94%; yes, this satisfies the minimum required leverage ratio.
B
2.94%; no, this does not satisfy the minimum required leverage ratio.
C
3.45%; yes, this satisfies the minimum required leverage ratio.
D
3.45%; no, this does not satisfy the minimum required leverage ratio.
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