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Answer: 3.45%; yes, this satisfies the minimum required leverage ratio.
## Explanation Under Basel III, the minimum leverage ratio requirement is **3%**. - **Option A (2.94%; yes)** - Incorrect because 2.94% is below the 3% minimum requirement - **Option B (2.94%; no)** - Incorrect because while the "no" answer is correct for 2.94%, the ratio itself is wrong - **Option C (3.45%; yes)** - **CORRECT** - 3.45% exceeds the 3% minimum requirement - **Option D (3.45%; no)** - Incorrect because 3.45% does satisfy the minimum requirement 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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