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A large Bank Holding Company has Tier-1 capital of $40 billion and Tier-2 capital of $20 billion and risk weighted assets of $550 billion. Calculate the risk based capital ratios and determine whether they meet the required standards.

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Solution Summary

This solution calculates the risk based capital ratios for a bank based on Tier-1, Tier-2 capital and risk weighted assets

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Tier 1 capital = $40 billion
Tier 2 capital = $20 billion
Risk weighted assets = $550 billion

Total capital = Tier 1 capital + Tier 2 capital = ...

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