question archive Asset Amount ($b) Risk Weighted Assets Risk Weight 0% ES funds 4
Asset Amount ($b) Risk Weighted Assets Risk Weight 0% ES funds 4
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Asset Amount ($b) Risk Weighted Assets Risk Weight 0% ES funds 4.5 T-notes and CG bonds 5.5 0% Home loans (LVR 85%) 60 100% Business loans 150 100% Total 410 The bank has $20b equity. Calculate the equity to risk weighted asset ratio (in %, 1% = 1) You can use (your hopefully correct!) answer from before for the RWA (risk weighted assets)
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Equity of the bank= $ 20 b
The total risk weighted assets are calculated in the below drawn table:
| Asset | Amount $b | Risk weight | Risk weighted asset |
| ES funds | 4.5 | 0% | 0 |
| T notes & CG bonds | 5.5 | 0% | 0 |
| Home loans(LVR<80%) | 190 | 75% | 142.5 |
| Home loans(LVR>85%) | 60 | 100% | 60 |
| Business loans | 150 | 100% | 150 |
| Total | 410 | 352.5 | |
Total risk weighted assets= 352.5
equity to risk weighted asset ratio= (20/352.5)*100= 5.6738 % (Rounded to 4 decimals)
