Explanation:
According to Basel I the risk weights for different assets are:
| Cash and Treasury bills | 0% |
| Uninsured residential mortgages | 50% |
| Loans to corporations | 100% |
The risk-weighted assets for the bank can be calculated as:
50` \times 0% + 100 \times 0% + 750 \times 100% + 100 \times 50% = 800 \text{ million}
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Q.2737 A bank’s annual financial statements showed the following assets:
| (in $ million) | |
|---|---|
| Cash | 50 |
| Treasury bills | 100 |
| Loans to corporations | 750 |
| Uninsured Residential mortgages | 100 |
Calculate the bank’s risk-weighted assets based on the Basel I guidelines.
A
$850 million
B
$700 million
C
$750 million
D
$800 million
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