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How do you interpret capital adequacy ratio?

By IndianMoney , 9 months ago

1. It is used to absorb losses if a bank loses all its Tier-1 capital. 2. The two capital tiers are added together and divided by risk-weighted assets to calculate a bank's capital adequacy ratio. 3. Risk-weighted assets are calculated by looking at a bank's loans, evaluating the risk and then assigning a weight.

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