(1)CommonEquity Tier 1Risk-BasedRatioZone1. Well capitalized 6.5% or above and 8% orabove2. Adequatelycapitalized3. Undercapitalized4. Significantly45% or above and 6% oraboveUnder 4.5%undercapitalized Under 3%Under 6%or Under 6%5. Criticallyundercapitalized Tangible equity/Total assets 52%(2)Tier IRisk-BasedRatinorundercapitalized.well capitalized.adequately capitalized.6TotalRisk-BasedRatioand 10% oraboveofand 8% or above and 4% oraboveUnder 8%and 5% oraboveTier1LeverageRatiooror Under 8% ofUnder 4%Under 4%Capital Directive/Otherand Not subject to a capitaldirective to meet a specificlevel for any capitalmeasureand Does not meet thedefinition of wellcapitalizedA bank has CET 1 capital of $50 million, Tier I capital of $90 million and Tier II capital of $70 million. The bank has risk-weighted assets of $2,017.6 million. Bacapital ratio, this bank is:significantly undercapitalized.

Name: (1)CommonEquity Tier 1Risk-BasedRatioZone1. Well capitalized 6.5% or
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Description: (1)CommonEquity Tier 1Risk-BasedRatioZone1. Well capitalized 6.5% or above and 8% orabove2. Adequatelycapitalized3. Undercapitalized4. Significantly45% or above and 6% oraboveUnder 4.5%undercapitalized Under 3%Under 6%or Under 6%5. Criticallyunderca

CET 1 capital ratio = CET 1/risk-weighted assets= ($50 million/ $2,017.6)*100= 2.48% The bank's CET…

Business

Economics

Common Equity Tier 1 Risk-Based Ratio Zone 1. Well capitalized 6.5% or above and 8% or above 2. Adequately capitalized (2) 3. Undercapitalized Under 4.5% 4. Significantly undercapitalized Under 3% 45% or above and 6% or above Under 6% or Under 6% 5. Critically undercapitalized Tangible equity/Total assets 52% or Tier I Risk-Based Ratio (3) Total Risk-Based Ratio and 10% or above of and 8% or above and 4% or above Under 8% or Under 8% Tier 1 Leverage Ratio and 5% or above (4) or of Under 4% Under 4% Capital Directive/Other and Not subject to a capital directive to meet a specific level for any capital measure and Does not meet the definition of well capitalized A bank has CET 1 capital of $50 million, Tier I capital of $90 million and Tier II capital of $70 million. The bank has risk-weighted assets of $2.017.6 million. Ba apital ratio, this bank is: significantly undercapitalized. undercapitalized. well capitalized. adequately capitalized.

Common Equity Tier 1 Risk-Based Ratio Zone 1. Well capitalized 6.5% or above and 8% or above 2. Adequately capitalized (2) 3. Undercapitalized Under 4.5% 4. Significantly undercapitalized Under 3% 45% or above and 6% or above Under 6% or Under 6% 5. Critically undercapitalized Tangible equity/Total assets 52% or Tier I Risk-Based Ratio (3) Total Risk-Based Ratio and 10% or above of and 8% or above and 4% or above Under 8% or Under 8% Tier 1 Leverage Ratio and 5% or above (4) or of Under 4% Under 4% Capital Directive/Other and Not subject to a capital directive to meet a specific level for any capital measure and Does not meet the definition of well capitalized A bank has CET 1 capital of $50 million, Tier I capital of $90 million and Tier II capital of $70 million. The bank has risk-weighted assets of $2.017.6 million. Ba apital ratio, this bank is: significantly undercapitalized. undercapitalized. well capitalized. adequately capitalized.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.

Topic Video

Question

(1)
Common
Equity Tier 1
Risk-Based
Ratio
Zone
1. Well capitalized 6.5% or above and 8% or
above
2. Adequately
capitalized
3. Undercapitalized
4. Significantly
45% or above and 6% or
above
Under 4.5%
undercapitalized Under 3%
Under 6%
or Under 6%
5. Critically
undercapitalized Tangible equity/Total assets 52%
(2)
Tier I
Risk-Based
Ratin
or
undercapitalized.
well capitalized.
adequately capitalized.
6
Total
Risk-Based
Ratio
and 10% or
above
of
and 8% or above and 4% or
above
Under 8%
and 5% or
above
Tier1
Leverage
Ratio
or
or Under 8% of
Under 4%
Under 4%
Capital Directive/Other
and Not subject to a capital
directive to meet a specific
level for any capital
measure
and Does not meet the
definition of well
capitalized
A bank has CET 1 capital of $50 million, Tier I capital of $90 million and Tier II capital of $70 million. The bank has risk-weighted assets of $2,017.6 million. Ba
capital ratio, this bank is:
significantly undercapitalized.

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