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Explanation:
Using the weight ratios under the Basel I accord, the RWA is given by:
RWA = 0% × 200 + 100% × 500 + 50% × 300 + 20% × 250 = $700 million
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Q.4223 The constituents of an American bank are $200 million of American government bonds, $500 million of loans to corporations, $300 million of uninsured residential mortgages, and $250 million of residential mortgages issued by the public sector. What is the value of risk-weighted assets (RWA) based on Basel I accord?
A
$1250 million
B
$600 million
C
$700 million
D
$850 million